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Factors Contributing to the Success of Organic Vegetable Supply Chain
to Meet Market Demand
A case study in West Java and Greater Jakarta, Indonesia
Puspa Rizki Andhani
920617015110
Study Program:
MSc Management, Economics and Consumer Studies (MME)
MSc Thesis Management Studies
Wageningen University
2017
ii
Title Page
Factors Contributing to the Success of Organic Vegetables Supply Chain to Meet Market
Demand: A case study in West Java and Greater Jakarta, Indonesia.
Puspa Rizki Andhani
920617015110
Study Program:
MSc Management Economics and Consumer Studies (MME)
Management Studies Group
Wageningen University
2017
Supervisors:
Prof. Jacques H. Trienekens (Management Studies Group)
dr. Jos Bijman (Management Studies Group)
iii
Abstract
The increasing of consumers’ awareness towards healthy food has made the demand for organic
vegetables risen as it is dominate 21% of domestic consumption of organic food in Indonesia. As
organic vegetables is perishable product, it needs to be delivered through an efficient supply chain in
order to maintain the quality and to sell the product to the consumers. This study, therefore, aims to
determine factors contributing to the success of organic vegetable supply chain in meting market
demand in West Java and Greater Jakarta, Indonesia. For this purpose, the respondents from three
different organic vegetable supply chains and third parties were interviewed. The quality of products,
the collaboration between actors, the logistics and the market demand in each supply chain are
compared to determine the contributing factors. In terms of current state in organic vegetable supply
chain, the first and second chain has better contributing factors compared to the third chain. The
current market demand based on quality attributes analysis show that consumers demand is generally
driven by health, safety and process attributes. The bottlenecks that has been found in this study are
mainly about lower quality and quantity of products due to severe weather condition. The influence
of collaboration between actors is more significant to the quality of product compared to the logistics.
On the other hand, the logistics also affects to the quality of product. Both the quality of product and
the logistic have significant influence to meet the market demand for organic vegetables in urban
areas. Possible improvements that can be implement is prioritising the quality of product which needs
better logistic facilities and intensive collaboration between actors in the chain.
Keywords: Organic Vegetables, Supply Chain, Quality of Product, Collaboration between Actors,
Logistics, Market Demand, Quality Attributes
iv
Executive Summary
This study aims to determine factors contributing to the success of organic vegetable supply chain in
meeting market demand in West Java and Greater Jakarta, Indonesia. The general research questions
is formulated by focusing on “How does the quality of the product, the collaboration between actors
and the logistics within the organic vegetables supply chain in West Java successfully meet the market
demand in the urban areas?”
This study implements snowball sampling, which is a common non-random sampling. The comparative
analysis is used to explore the data and information that are collected from the semi-structured
interviews. The quality of products, the collaboration between actors, the logistics and the market
demand in each chain are compared to determine the contributing factors that successfully connect
the organic vegetable supply chain to meet market demand.
Three current available market channels in organic vegetable supply chain has been studied. The first
chain, the producer distributes the product through registered agents who act as the reseller. The
second chain is supplying the products to supermarkets, restaurants and online through the farm’s
official website. The third chain is a cooperative that receives supply from the village farmers and sell
the product to a school in the urban area. Morever, the member of the cooperative who works as a
distributor also receives supply from the same village farmers and other farms which are later
distributed to the end-consumers in urban area.
The findings of the current state in organic vegetable supply chain show that the first and second chain
have higher quality products due to a better established quality control system. The collaboration
between actors in the first and second chains has a better communication system (the use of mobile
messaging application) which contributes to the increase of trust and commitment among the actors.
In terms of logistic, the first chain have better transportation (a refrigerated truck) compared to other
two chains. While in terms of storage, the chains use other alternatives to replace the cold storage.
The current market demand for organic vegetables in urban areas has been analysed based on four
quality attributes. The higher demand for organic vegetables is generally driven by health, safety and
process attributes. Most of the consumers associate the organic vegetables to the absence of chemical
used from the pesticides and fertilizer, and the improvement of the consumers’ health.
The bottlenecks in the organic vegetable supply chain lower the quality and quantity of products
during the severe weather due to the use of outdoor farm. The producer’s sudden notificiation to the
consumers about limited quantity of organic vegetables and limited human resources is the main
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bottleneck for the collaboration between actors. Another bottleneck in the logistic is the unequal
production capacity to high market demand, and early delivery service time to the consumers.
Regarding the conceptual framework of this study, it has been found that the influence of
collaboration between actors is more significant to the quality of products compared to the logistic.
Meanwhile, the logistic also affects to the quality of products. In the end, to meet the market demand
in urban areas, both the quality of product and the logistic influence are significant.
A possible improvement for the organic vegetable supply chain is prioritising the quality of the product
which needs intensive collaboration among all actors. A higher level of trust, commitment and
effective communication has an important role in obtaining better quality organic vegetables. Each
chain should consider both transportation and storage in logistic based on the duration of distribution
and the distance between the farm and the consumers’ location. Furthermore, more in-depth study
can be carried out to analyse each contributing factor in the organic vegetable supply chain.
vi
Table of Contents Abstract .................................................................................................................................................. iii
Executive Summary ................................................................................................................................ iv
Table of Contents ................................................................................................................................... vi
Table of Figures ..................................................................................................................................... viii
List of Tables .......................................................................................................................................... ix
Abbreviations .......................................................................................................................................... x
1. INTRODUCTION .................................................................................................................................. 1
1.1 Background ................................................................................................................................... 1
1.2 Research Objective ....................................................................................................................... 3
1.3 General Research Question .......................................................................................................... 3
1.3.1 Research Questions................................................................................................................ 3
1.4 Research Framework .................................................................................................................... 4
2. LITERATURE STUDY ............................................................................................................................. 5
2.1 Type of Available Market Channel in Organic Vegetable Supply Chain ........................................ 5
2.2 Collaboration between Actors ...................................................................................................... 6
2.2.1 Trust and Commitment .......................................................................................................... 6
2.2.2 Communication ...................................................................................................................... 6
2.3 The Logistics .................................................................................................................................. 7
2.3.1 Transportation ....................................................................................................................... 8
2.3.2 Storage ................................................................................................................................... 8
2.4 Quality of Product ......................................................................................................................... 8
2.4.1 Quality Control ....................................................................................................................... 9
2.3.2 Quality Assurance ................................................................................................................ 10
2.5 Market Demand .......................................................................................................................... 12
2.5.1 Sensory Attributes ............................................................................................................... 13
2.5.2 Health Attributes.................................................................................................................. 13
2.5.3 Safety Attributes .................................................................................................................. 14
2.5.4 Process Attributes ................................................................................................................ 14
2.6 Conceptual Framework ............................................................................................................... 15
3. RESEARCH METHODOLOGY .............................................................................................................. 16
3.1 Research Design .......................................................................................................................... 16
3.2 Study Area ................................................................................................................................... 16
3.3 Methods of Data Collection and Analysis ................................................................................... 17
3.3.1 Sampling ............................................................................................................................... 17
3.3.2 Data Collection ..................................................................................................................... 20
vii
3.3.3 Data Analysis ........................................................................................................................ 20
4. FINDINGS ........................................................................................................................................... 21
4.1 Current Available Market Channel in Organic Vegetable Supply Chain ..................................... 21
4.1.1 Description of AOA Chain ..................................................................................................... 21
4.1.2 Description of FE Chain ........................................................................................................ 27
4.1.3 KSUGL Chain ......................................................................................................................... 30
4.1.3 Third Parties ......................................................................................................................... 33
4.2 Current state of Organic Vegetables Supply Chain..................................................................... 38
4.2.1 Quality of Product ............................................................................................................... 38
4.2.2 Collaboration between Actors ............................................................................................. 47
4.2.3 The logistics ......................................................................................................................... 54
4.3 Current Market Demand ............................................................................................................. 60
4.3.1 Sensory Attributes ............................................................................................................... 60
4.3.2 Health Attributes.................................................................................................................. 61
4.3.3 Safety Attributes .................................................................................................................. 62
4.3.4 Process Attributes ................................................................................................................ 63
4.4. The Bottlenecks that affects the Successful Connection in Organic Vegetables Supply Chain .. 64
4.4.1 Quality of Product ................................................................................................................ 65
4.4.2 Collaboration between actors.............................................................................................. 66
4.4.3 The Logistics ......................................................................................................................... 69
5. DISCUSSION AND LIMITATION .......................................................................................................... 72
5.1 Discussion: Comparison on Three Organic Vegetable Supply Chains ......................................... 72
5.2 Discussion: reflection on the conceptual framework ................................................................. 76
5.3 Limitations ................................................................................................................................... 80
6. CONCLUSION AND RECOMMENDATION .......................................................................................... 82
6.1 Conclusion ................................................................................................................................... 82
6.2 Recommendation ........................................................................................................................ 84
REFERENCES .......................................................................................................................................... 85
Appendix. .............................................................................................................................................. 89
viii
Table of Figures
Figure 1. Development of organic agricultural land in Indonesia from 2010 – 2014 ............................. 2
Figure 2. Research Framework ............................................................................................................... 4
Figure 3. Conceptual Framework .......................................................................................................... 15
Figure 4. The study area of three organic vegetable farms in West Java, Indonesia ........................... 17
Figure 5. The flow of AOA organic vegetables supply chain. ................................................................ 27
Figure 6. The flow of FE organic vegetables supply chain. ................................................................... 30
Figure 7. The flow of KSUGL organic vegetable supply chain. .............................................................. 33
Figure 8. Timeline of logistics process in AOA Chain ............................................................................ 55
Figure 9. Timeline of logistics process in FE Chain ................................................................................ 57
Figure 10. Timeline of logistics process in KSUGL Chain ....................................................................... 58
Figure 11. Timeline of logistics process for DN ..................................................................................... 59
Figure 12. Reflection on conceptual framework .................................................................................. 76
ix
List of Tables
Table 1. Overview of the respondents’ data ......................................................................................... 19
Table 2. Overview of the Respondents' in AOA Chain .......................................................................... 22
Table 3. Overview of the Respondents' in FE Chain ............................................................................. 28
Table 4. Overview of the Respondents' in KSUGL Chain ....................................................................... 31
Table 5. Overview of the Third Parties.................................................................................................. 34
Table 6. The Current State of Product’s Quality in Organic Vegetable Products ................................. 39
Table 7. Current State of the Collaboration between Actors in Organic Vegetables Supply Chains .... 48
Table 8. The Current State of Logistics in Organic Vegetable Supply Chains ....................................... 54
Table 9. Overview of Attributes in Market Demand ............................................................................. 60
Table 10. The Overview of the Bottlenecks in Organic Vegetable Supply Chains ................................ 64
Table 11. Comparison on three different organic vegetable supply chains ......................................... 72
x
Abbreviations
AF Amazing Farm
ANO Abby’s Natural Organic
AOA Agatho Organis Agro (BSB Agatho)
BCI Biocert Indonesia
BU Bakrie University
FE Famili Ekokultura (FAM Organic)
IFOAM International Federation of Organic Agriculture Movements
KC Kecipir
KSUGL Koperasi Serba Usaha Guna Lestari
PGS Participatory Guarantee SYstem
PMI Pamor Indonesia
RPS Regina Pacis School
SB Setiabudhi supermarket
TBS Total Buah Segar supermarket
THF Two Hands Full restaurant
TVMS Tenjolaya Village Mount Salak
VB Villa Botani
1
1. INTRODUCTION
The motivation to conduct the study is described in the background section of the introduction
chapter, which explains the situation of the current state organic vegetables supply chain in Indonesia,
specifically in the West Java province and Greater Jakarta area. The aim of this study is formulated in
the research objective section, followed by a list of research questions that need to be answered to
fulfil the research objective. In order to conduct the research in a more efficient manner, the last part
of the introduction illustrates the research framework.
1.1 Background
Changes in lifestyles and consumption patterns promoting healthy food slowly push farmers forward
to implement organic farming. The use of inorganic chemicals found in fertilisers, pesticides or growth
hormones has an adverse impact on human health, the environment and animal welfare. As stated by
the European Union (2007), organic production is an overall system of farm management and food
production that combines best environmental practices, a high level biodiversity, the preservation of
natural resources, the application of animal welfare standards and a production method in line with
the preference of certain consumers for products harvested using natural substances and processes.
However, in recent years, the organic agricultural land has extended significantly. FiBL and IFOAM
(2016) found that in 2010, the total organic agricultural land in Indonesia was 83.630 ha and decreased
slightly to 74.034 ha in the following year. The number fluctuated in 2012 and 2013 by 88.247 and
65,688 ha. However, in 2014, it grew sharply to 113.638 ha. One of the factors that influence those
fluctuative trend was the high number of producers who no longer certifying their land. For another
case, several producers were unable to follow the organic principle. Thus, their certification was
revoked by the organic certification body. The government was trying to increase the organic
agriculture land through several programs, such as 1000 organic villages program. The development
of organic agriculture land can be seen in Figure 1.
2
Figure 1. Development of organic agricultural land in Indonesia from 2010 – 2014
Source: FiBL & IFOAM, 2016
Horticulture is defined as the branch of agriculture concerned with growing plants that are used by
people for food, medical purposes and aesthetic gratification (USDA, 1980). Besides rice, horticulture
plays an important role as a primary need for people in Indonesia, especially vegetables; in which it
used in most of the Indonesian food. It should be available at all times in an adequate amount and
quality. Based on David & Ardiansyah (2016), vegetables dominate 21% of domestic consumption of
organic food in Indonesia. Areas in which organic vegetables are cultivated has reached 443 hectares
in Indonesia by 2014 (FiBL and IFOAM, 2016). However, the increase in the organic vegetable demand
is mainly located in big cities in Indonesia, especially in the Greater Jakarta, which is reflected in the
higher number of consumers. The middle to higher household income and higher education level raise
awareness and financial means to purchase organic vegetable products. In 2015, almost 54% of
Indonesian living in urban areas; especially in Greater Jakarta, are middle to higher income households
with a good educational background. This characteristic has a significant impact on organic product
consumption. Also, young generations living in urban areas tend to be more open to the idea of
consuming organic products (David & Ardiansyah, 2016). Hence, the physical markets for organic
vegetables grow steadily in urban areas, such as Greater Jakarta area and Bandung city (West Java).
The organic vegetable farms in West Java has been targeting their product to fulfil the market demand
in both urban areas.
As perishable products, organic vegetables are delivered through an efficient supply chain to maintain
the quality and to sell the product to the consumers in the physical market successfully. Supply chain
management is an integration of activities that occur in the improvement of the supply chain
relationship to achieve a sustainable competitive advantage (Handfield & Nichols, 1999). Several
organic vegetable supply chains are currently present in West Java which have different market
channels in order to connect the market demand successfully.
83.63
74.034
88.247
65.688
113.638
0
20
40
60
80
100
120
2010 2011 2012 2013 2014
Development of Organic Agriculture Land
Total Organic Agriculture Land (ha)
3
Each organic vegetable supply chain has their own unique contributing factors that may differ from
others. Thus, contributing factors like market demand, quality of the product, the collaboration
between actors in a chain and the logistics need to be investigated. Several challenges that need to be
overcome are more likely related to limited logistics facilities, such as the unavailability of cold storage,
unsuitable transportation, traffic congestion and high time consumption during the distribution
process. The logistics issues will affect the quality of the product. It is important to understand how
organic vegetable farms perform the quality control and which quality assurance they followed to
produce and maintain a high-quality vegetable product. Moreover, a collaboration between actors in
each chain could influence the way they cater to the market demand. If the actors in a chain shared a
common understanding of the organic vegetable supply chain, it could increase the chances for
success in the urban area's market. Furthermore, it is important to understand which products
consumers’ desire. Even though the trend to consume organic vegetables is now increased due to a
high number of new organic vegetable consumers. Yet, the rate of continuous purchase and the
commitment to allocate the expenditure for organic vegetable consumption are still below the
conventional food product (David & Ardiansyah, 2016).
1.2 Research Objective
This study consists of four research objectives. The first objective is to analyse the current state of
organic vegetable supply chain in West Java, Indonesia. The second and the third objectives are to
identify the bottleneck and the possible improvements of the quality of the product, the collaboration
between actors and the logistics within the organic vegetables supply chain to meet the market
demand in urban areas. The last objective of this study is to identify the critical areas for further
research in the organic vegetables supply chain.
1.3 General Research Question
To achieve the research objective, a general research question for this study is formulated as follows:
“How do the quality of the product, the collaboration between actors and the logistics within the
organic vegetables supply chain in West Java successfully meet the market demand in the urban
areas?”
1.3.1 Research Questions
1) What is the current market channel in the organic vegetable supply chain in West Java?
2) What are the current states of the quality of the product, the collaboration between actors,
and the logistics within the organic vegetable supply chain in West Java?
4
3) What is the current market demand that based on the quality attributes for organic vegetables
in the urban areas?
4) What are the bottlenecks in the quality of the product, the collaboration between actors, and
the logistics that affect the organic vegetable supply chain to meet the market demand?
5) What are possible improvements in quality of the product, the collaboration between actors,
and the logistics within the organic vegetable supply chains to meet the market demand?
1.4 Research Framework
In order to conduct the study effectively, research framework is formulated. The first step was
literature study which is followed by conceptual framework, data collection, analysis, conclusion and
recommendation (Figure 2).
Figure 2. Research Framework
5
2. LITERATURE STUDY
Following the research questions presented in the introduction, this chapter further elaborates on the
literature review, which aids in answering those questions. The different types of organic vegetable
supply chains that are currently available are described in the first part of the chapter. Furthermore,
the previous studies regarding the market demand for organic vegetables provide insights about
consumers’ expectations towards the product that offered by the producers. The processes to
produce a high-quality product are also explained in depth in the following part. In the end, studies
about collaboration between actors and the logistics will help to explore its contribution to a
successful connection in an organic vegetable supply chain.
2.1 Type of Available Market Channel in Organic Vegetable Supply Chain
There are several types of market channel in the organic vegetable sector. However, the studies and
data related to the different types of organic vegetable supply chains are still limited in Indonesia.
Each chain relies on different contributing factors that can help build a successful connection between
supply chains with its market.
In a previous study, Dimitri and Greene (2002) state that 60% of farms with land area fewer than
40.000 m2 are mostly used direct marketing channel, compared to 12% of farms with more than
40.000 m2. The producer can earn a higher profit by selling the organic foods to the consumers directly,
instead of selling through a middleman (Dimitri & Greene, 2002). Direct marketing channel enables
the producer to sell the products with premium price and to gain consumer trust (Park & Lohr, 2006).
Lee, Gareffi & Beauvais (2012) also state that organic vegetable supply chain usually consists of
numerous producers and retailers which are small in size with little demand and supply. In this sense,
products are traded by price and quantity, with little or no brand recognition (Lee, Gareffi & Beauvais,
2012). In addition, larger farms were more likely to use multiple marketing channels which tends to
make the producers earn more than one marketing channel (Park & Lohr, 2006). On the other hand,
the additional time and resources that are required to deal with different types of customers
throughout multiple stages of the supply chain reduce the company’s ability to focus entirely on its
core competencies (Chang, 2002).
Delivering the product to the market through one channel leads to advantages as well as
disadvantages for organic vegetable farms. Using only one channel means farms collaborate with a
single actor on the market, which implies the strengthening of their relationship and an active
collaboration, which may remain long-term (Chang, 2002). Meanwhile, the dependence on a single
6
actor poses a disadvantage due to the increased risk for the supply chain, which arises from the
possibility of the single actor ceasing the collaboration (Chang, 2002).
Thus, this study will be focused on direct marketing channel that commonly found in the organic
vegetable supply chain. The number of market channel can differ for each chain which depends on
their market demand.
2.2 Collaboration between Actors
The interaction between actors of a food chain is composed of repeated communication that slowly
shifts the relationships from the short-term transactional end of the continuum towards the other
end. The nature of the relationships differs from the solid collaboration in partnership to more formal
and rigid relationship (Barrat, 2004; Kottila & Ronni, 2008). The short and long duration of
relationships does not indicate the closeness between the actors to obtain the common goal, which is
to deliver the right products to the consumers. Hence, several variables are identified to measure the
collaboration between actors in the organic vegetable supply chain, such as trust and commitment,
communication and information exchange (Moberg, Cutler, Gross & Speh, 2002; Peng, G. 2011).
2.2.1 Trust and Commitment
Transparency of a supply chain network is the extent to which all the stakeholders have a shared
understanding of, and access to product and process related information that they request, without
loss, noise, delay, and distortion (Beulens, Broens, Folstar, & Hofstede, 2005). Moorman, Zaltman &
Deshpande (1992) define trust as the willingness to rely on an exchange partner in whom one has
confidence, while commitment is an enduring desire to maintain a valued relationship. Both trust and
commitment are two essential elements of a strong long-term relationship. Furthermore, it can also
affect the integrated and efficient logistics and higher quality of organic vegetable products.
2.2.2 Communication
Collaborative communication between actors involves higher frequency, more bi-directional flows,
informal modality and indirect, non-coercive content (Kottila & Ronni, 2008). Aligned interests foster
shared values, and mutual support may increase in line with the increase of an individual actors’
perception of being an important part of the chain (Kottila & Ronni, 2008). The development of broad
interfaces between actors could overcome the lack of communication and create an atmosphere
whereby innovative thinking is the support for tackling the problems that occur in the organic
vegetable chain (Kotilla & Ronni, 2008).
7
Veldstra, Alexander and Marshall (2014) state that organic food producer who sell their product at
local markets (e.g. directly at their farm, producers’ market, community market) requires face-to-face
relationship with their consumers, can communicate their production practices directly. As it is
important to open and develop clear and broad lines of communication (Frankel, Goldsby & Whipple,
2002) in order to encourage information exchange and to create a shared understanding (Kotilla &
Ronni, 2008).
Information Exchange
The processes of information exchange that occur during the supply chain activities are necessary
to strengthen the collaboration between actors in the chain. Information exchange is defined as
a fundamental component of a successful sustainable supply chain (Cooper, Lambert & Pagh,
1997). Storer (2005) also mentions that the inter-organizational information exchange aims to
manage relationships with customers and suppliers and to build competitive advantages. In turn,
developing an effective information exchange could share a common understanding among all
the actors. Furthermore, it can encourage collaboration in tackling problems and increasing the
productivity and efficiency in a chain.
In order to share understanding between the actors, the quality of the information exchange
needs to be determined. Factors that should be present are accuracy, timeliness, and proper
formatting of the information (Gustin, Daugherty & Stank, 1995). The quality of information flows
and transparency in supply chains can affect the costs and non-value adding activities in a chain.
Thus, the costs and non-value adding activities in the chains will be reduced.
2.3 The Logistics
Logistics refers to a part of a supply chain process that plans, implements, and controls the efficient,
effective flow and storage of goods, services and related information from the point of origin to the
point of consumption to meet consumers’ requirement (CSCMP, 2007). Hence, logistics plays a key
role in supply chains to successfully deliver organic vegetables from the suppliers to the end-
consumers.
A previous study by Xin-Min (2012), states about three types of logistics processes for organic products
that sell to specialised stores. First, the producers as a production base who delivers their product by
using transportation (i.e. truck) to the warehouse and later to the specialised store. Second, the
logistics process starts from production base (purchasing) transport to warehouse, then through the
distributor, the product is delivered to the specialised store. Third, production base delivers to the
warehouse and later producers conduct promotion themselves at the respective shops.
8
There is similarity between the direct sales from the producer to the big supermarket and to
specialised stores. The big retailers (e.g. supermarkets) pick up the organic vegetables from the
producers and deliver the product with their transportation and keep the product in storage before
bringing it to the shelf (Xin-Min, 2012). Traditional market channel which is identical with conventional
food products involve more actors including the producers, the first distributor, and then a bigger
distributor who will sell the products to the vegetable seller in the traditional market and then
continue to end-consumers (Xin-Min, 2012). Apart from the traditional market, the distributor also
sells their product to restaurants or stores. Several variables are determined to measure the logistics
flow in organic vegetable chain.
2.3.1 Transportation
Production areas of organic products are scattered, while the consumption is concentrated. On the
other hand, the logistics size is small and scattered, implying higher transportation costs. The organic
vegetables are mainly produced in remote areas while the consumption is centralised in the major
cities (Xin-Min, 2012). Meanwhile, other problems in urban areas related to transportation are the
severe traffic congestion, high gas emissions, and possible accident fatalities, which could significantly
affect transportation costs. Hence, the solution is to deliver the product at an off-peak time or night
deliveries and use highways in city centres (Pramatari, 2016).
2.3.2 Storage
To ensure the quality of organic vegetables, the utilisation of cold storage is essential in the logistics
chain. Due to small production scale and scattered production areas, the development and
employment of cold storage are much harder. Based on Xin-Min (2012), the problem of the organic
chain is the small production scale and the small volume of refrigeration and precooling equipment,
which result in the high operation costs and low economic benefits.
2.4 Quality of Product
Quality refers to the ability of a product to accomplish the purpose to fulfil consumers demand and
expectations (Manikas, Hamann & Sentic, 2016). It works as the set of properties and features that
satisfy the definite and implicit needs of the consumers (Tzia & Tsiapouris, 1996). However, different
chain actors have different interpretations of the concept of quality, even though the ultimate goal is
to satisfy the end-consumers. For example, producers tend to be concerned about productivity
uniformity and disease resistance. Distributors rate the quality of the product regarding long shelf life,
and resistance to damage, while the end consumers have a preference for taste, appearance,
healthiness and consistency. To standardise the quality of organic vegetable products for the
9
consumers, quality control becomes an essential aspect that needs to be conducted appropriately and
regularly. Furthermore, specific guidelines need to be followed by organic vegetable producers to
standardise the product for the market. These guidelines are included in the quality assurance
activities.
2.4.1 Quality Control
According to Luning and Marcelis (2009), quality control is the primary activity in food quality
management. The purpose of quality control for organic vegetable products is to keep product
properties, production processes, and human processes within certain acceptable boundaries. The
activities related to quality control are mainly measuring product and process properties, comparing
measurement result with target values and tolerances, and taking corrective actions if considered
necessary. Evans and Lindsay (2005) state that the quality control of a product is the evaluation of the
performance of technological and human processes, which need corrective actions when required.
Knowledge, skills, competence and commitment of the product quality are important factors for
producers during the quality control performance (Luning & Marcelis, 2009). In this study, the quality
control process in organic vegetable farms during pre-harvest, harvest and post-harvest are analysed.
Pre-Harvest
In previous studies, it is mentioned that pre-harvest practices have a significant effect on the
quality of organic vegetable products. The practices include the selection of suitable varieties,
cultivation practices, and environmental conditions.
The selection of suitable varieties is typically based on yield potential, disease resistance,
or suitability of local conditions.
Cultivation practices are related to sowing date, nutrient supply, irrigation, and plant
protection. Regarding organic vegetable farming, the producers replace the chemical
fertiliser and pesticides with more environmental-friendly (i.e. fermentation of animal
manure and certain plants).
Environmental conditions are related to the environmental temperature, day length and
amount of rainfall in the farm area.
Harvest
The major factors in harvesting practices that influence the quality of organic vegetables are
harvesting time and mechanical injuries which are part of the physical damage. The harvest time
has an impact on the development process during growth and ripening phase. The crops have to
be harvested at a particular maturity to be able to sell it to the market. There are two common
10
characteristics used to determine the crop maturity. First, it depends on grower’s experiences and
opinion. Second, the sampling of representative specimens which are tested by smell and or taste.
Mechanical injuries during harvesting can accelerate deterioration and reduce the products’ shelf
life. This issue is caused by careless harvesting practices, rough field handling of product,
inappropriate use of containers (i.e. over packing containers) and by people walking or sitting on
the product in containers (Luning & Marcelis, 2009).
Post-Harvest
During post-harvesting, organic vegetable products are transported to the storehouses for sorting,
grading, pre-treatments and packaging. The product needs to be carefully loaded and unloaded
to prevent physical damage. The product packaging can prevent mechanical injuries during the
distribution and storage life, making packaging process an important factor in maintaining the
quality attributes of organic vegetable products. Moreover, the packaging is an important
marketing tool for quality requirements. In this sense, it can include information about the
ingredients, nutrient content, certification, and label of the product.
2.3.2 Quality Assurance
Quality assurance is an important addition to the regular activities of quality control (Luning &
Marcelis, 2009). The certification is designed to maintain the highest standards of quality and safety
product from the cultivation to the packaging of the product (Scott, Vandergest & Young, 2005). Which
is also apply during the distribution process to consumers (Scott, Vandergest & Young, 2005). Several
quality assurance guidelines and standards can be followed by organic vegetable producers which the
certification is provided by a third party certification (Luning & Marcelis, 2009). They are responsible
for determining whether the production process and the quality of the product corresponding to an
applicable standard and to conduct a regular inspection of the farm.
By standardising the organic label, the consumers will gain trust about the product safety. Consistent
information on the product can encourage new consumers to consume organic vegetable product
regularly (Scott, Vandergest & Young, 2005). Johannsen, Wilhelm and Schone (2005) state that
certification tends to be introduced by producers to create consumer confidence immediately where
the consumer is not in direct personal contact with them. As the products of organic vegetables move
into larger markets in urban areas that required longer supply chains, the certification of organic food
could give an additional push to food safety and traceability of the product (Johannsen, Wilhelm &
Schone, 2005). It has also become a cornerstone of new added value through which agri-food
companies have sought to expand to the niche market (Scott, Vandergeest, & Young, 2005).
11
On the other hand, Klonsky and Tourte (1998) argue that certification is usually done by the large
farms, instead of small farms. Several barriers for organic certification consists of the three year
transition period, the financial and time cost of certification, and paperwork (Strochlic & Sierra, 2007;
Sierra et al., 2008) makes small-scale producer considered the certification process difficult. Marketing
strategies for the uncertified products, limited access to organic markets, and belief that the benefits
of certifying did not outweigh the cost are other problems that commonly found for organic
certification (Dimitri & Oberholtzer, 2008). Some producers preferred not to obtain the certification
as means to avoid the requirements and difficult process (Burton, Rigby & Young, 1999). This usually
applies to small-scale producers (Veldstra, Alexander & Marshall, 2014). Furthermore, the diversity of
crops and market channels does influence the decision of producer to certify their products, though
it does decrease the likelihood of obtaining certification (Veldstra, Alexander & Marshall, 2014).
Producers who apply organic practices and direct marketing channel are choosing not to obtain the
certification (Veldstra, Alexander & Marshall, 2014). Direct marketing becomes the solution as it
enables the producer to gain profit and consumer trust without having to do the certification (Park &
Lohr, 2006). Local consumers who are willing to pay a premium price can reduce the benefit of
certifying from producer’s point of view (Greene et al., 2009). Producers use the local brand as a
substitute for the organic certification label (Veldstra, Alexander & Marshall, 2014).
According to Scott, Vandergeest, and Young (2005), organic vegetables in Indonesia are still included
in a domestic market-oriented food crop sector. Organic vegetables in this sector are either uncertified
but labelled ‘organic', or certified by a third party certification body (Scott, Vandergest & Young, 2005).
Though Indonesian Government has established one single logo for organic food called ‘Organik
Indonesia’, the overall product package for the domestic market have yet to be uniformly labelled with
that logo (David & Ardiansyah, 2016; Scott, Vandergest & Young, 2005). Several producers are still
using a variety of terms for their vegetables, including ‘healthy,' ‘chemical free’ or ‘pesticide free’
(Scott, Vandergeest & Young, 2005). The ‘Organik Indonesia’ logo can only be earned if the producer
certifies their products through third party certification. Moreover, there are 23 certification bodies
which cover 224 organic producers in Indonesia (David & Ardiansyah, 2016). Though consumers at
local markets demand the certification and are willing to pay a premium price for certified organic
products, in the end, organic food producers have a strong incentive to decide whether they will do
the certification (Veldstra, Alexander & Marshall, 2014).
12
2.5 Market Demand
Food scandals and increased health awareness combined with shrinking time budgets of consumers
have led to the emergence of new markets. The sector has increased in revenues in organic and health
food segments. Although these markets are still referred to as ‘niche markets’, they are the markets
in which most of the money will be earned (Fuchs, Kalfagianni, & Arentsen, 2009). In this study, the
niche market investigated is related to the physical market that is available in urban areas.
Conversely, market demand is defined as the aggregate demand of a large number of households for
a product during a specific period in a specific market (Warner, 1994; Kotler & Armstrong, 2014). In
developing countries such as Indonesia, the levels of households’ income and education highly
influence the numbers of organic vegetable consumers. Wang and Sun (2003) in Dettmann and Dimitri
(2009) mention that higher income households are more likely to purchase organic products, but
unlikely to consistently devote a large share of their expenditures toward organic vegetables with
certification. Moreover, the increased access to education led to a higher probability of purchasing
organic vegetables and spending a greater proportion of the household income (Probst,
Houedjofonon, Ayerakwa, & Haas, 2012). Besides households, restaurants and hotels as the end-
consumers for organic vegetables exhibit relatively little interest in organic certification in contrast to
the preferences of higher income consumers with higher educational backgrounds, who associated
meals prepared using organic vegetables with relatively higher value (Probst, Houedjofonon,
Ayerakwa, & Haas, 2012). Therefore, middle to higher class households with higher level of
educational backgrounds play a major role in the market due to their awareness and perception.
It is essential to investigate the real market demand for the organic vegetable products to successfully
connect the organic vegetable chain to the market and meet the end-consumers’ expectation. One of
the main reasons for the end-consumers to consume organic vegetables is the high-quality of the
product. Grunert et al. (2005) differentiate the quality of product into four attributes based on the
perspective of the consumers, namely sensory attributes, health attributes, process attributes, and
convenience attributes. In contrast, Luning and Marcelis (2009) divide the product attributes into
intrinsic and extrinsic attributes. Intrinsic attributes consist of safety, healthy, sensory, shelf life and
convenience, while extrinsic attributes consist of production system characteristics and assigned
quality by marketing/communication.
To investigate the demand for organic vegetable products in the physical market in urban areas,
several variables of product quality from the consumers’ perspective are examined.
13
2.5.1 Sensory Attributes
Sensory attributes are perceived through receptors in tongue, nose, eyes and ears (Luning & Marcelis,
2009). Reardon and Farina (2002) define the notion of food quality regarding product appearance,
cleanliness, and taste, which are currently promoted by retailers to adjust to consumers. Consumers
tend to buy fresh vegetables according to its appearance (e.g. fresh red tomatoes, green lettuce
leaves, or purple for eggplant) (Reardon & Farina, 2002). Appropriate sensory characteristics of
products can affect the food acceptance and long-term repeated purchase (Luning & Marcelis, 2009).
According to Luning and Marcelis (2009), sensory attributes are divided into texture, aroma, taste, the
product appearance and sound. The interactions of five attributes occurred flavour as a sensation of
eating food.
The texture is defined as all the mechanical, geometrical, and surface attributes of a product
that can be recognized through mechanical, tactile, visual and auditory receptors. It is driven
by the perceptions of the structure and the product behaviour when handled and eaten.
The aroma of a product is influenced by volatile and non-volatile odour compounds. It makes
the product can be a smell at relatively low concentrations.
Taste are recognized through sweetness, saltiness, bitterness, sourness and savoury attributes
contained in a product
Appearance can greatly affect the quality perception of a product before consumption. The
common attributes in appearance are size, shape and form, gloss, visual defects, and colour.
The sound is highly correlated to the crispiness and freshness of a product.
2.5.2 Health Attributes
Health attributes are related to the nutritious contents of the product that is necessary for body
functioning and contribute to the people’s health. Healthiness is an essential parameter of quality for
many consumers (Magnusson, Arvola, Hursti, Åberg, & Sjödén, 2003). According to Suprato and
Wijaya (2012), a good predictor of consumer’s attitude towards organic foods is a healthy
consumption lifestyle. Another study from Deliana (2012) also supported the previous result that
health, vitamin content, dietary purpose, satisfying product, and supporting the government’s ‘Go
Green’ program become the driver for consumers to consume organic food. Organic vegetables have
higher concentrations of several essential amino acids, vitamin C, and minerals (Magkos, Arvaniti &
Zampelas, 2003). Organic food products contain a higher nutrient content than conventional products,
especially in leafy vegetables that contained higher vitamin C (Williams, 2002; Worthington, 1998,
Lampkin, 1990). Although Williams (2002) stated that there had been no solid evidence whether
organic food is heathier than conventionally produced foods, perceived healthiness is consumers’
14
most frequently mentioned reason to select organic foods. Consumers believe that organic food is
more nutritious due to chemical-free content (Hoang & Nakayusu, 2006; Padel & Foster, 2005). It is
supported by the study from MINTEL (2003), the main driving force to consume organic products is
the expected health benefit from the absence of chemical residues. Recent studies from (Slamet,
Nakayusu & Bai, 2017) found that common beliefs of Indonesian consumers towards organic
vegetable products are pesticides-free, artificial fertilisers-free and chemical residue-free contents.
Consumer’s decision to consume organic vegetables depend on their perception of the nutritional
value and health risk in the products (Akgüngör, Miran & Abay, 2010).
2.5.3 Safety Attributes
In addition to health attributes, Guilabert and Wood (2012) stated that safety attributes have also
become consumer value and motive to purchase organic foods. Safety attributes are indicated by
fewer chemical, fewer pesticides and naturally produced organic foods (Guilabert & Wood, 2012).
Most of the Indonesian consumer’s belief that organic vegetable products are free from chemical
residue as a result of the use of pesticides and fertilisers (Slamet, Nakayusu & Bai, 2017).
Luning and Marcelis (2009) defined safety attributes in a product refer to the absence of hazards or
an acceptable risk of hazard levels which is a potential source of danger that may contaminate the
food product and could lead to health disorders if consumed. The residues of chemical pesticides and
fertiliser that remain in vegetables can cause a safety risk for the consumers (Luning & Marcelis, 2009).
Furthermore, food safety in organic vegetables encompasses attributes such as levels of pesticide or
synthetic residue, and microbial presence in food (Reardon & Farina, 2002). Luning and Marcelis
(2009) also assert that the contamination from micro-organism and physical objects can affect the
consumer perceptions of organic vegetable products. The common physical hazards that can be seen
in a product are minerals, plant-derived and animal-derived (Luning & Marcelis, 2009). In the organic
vegetable products, animal-derived hazards sometimes can be found due to free chemical fertilisers
(Luning & Marcelis, 2009).
2.5.4 Process Attributes
Process attributes such as the relations to animal welfare, environmental soundness and
sustainability, organic production process and free genetic modification can influence the consumer’s
perception (Luning & Marcelis, 2009). Aside from the implication to peoples’ well-being, the use of
chemical compounds in vegetable farming can harm animals and environment. Organic foods are
perceived to be better than conventional foods in terms of environment aspects (Lea & Worsley,
2005). Based on the study from Slamet, Nakayushu and Bai (2017), Indonesian consumers who tend
to emphasise the importance of environmental soundness, are more likely to buy organic vegetables.
15
The environmental issues caused by the application of synthetic pesticides, herbicides, and fertiliser
to increase the productivity has led to the establishment of organic agriculture movement in Indonesia
(David & Ardiansyah, 2016). Yet, animal welfare and environment remain as the second driver of the
market compared to health and safety attributes (MINTEL, 2003; Truong, Yap & Ineson, 2012). Thus,
the way vegetables are produced can contribute to the purchasing motives of the consumers.
2.6 Conceptual Framework
Following the findings of literature reviews, the conceptual framework (Figure 3) intends to create a
deeper understanding of the structure of the research. Four contributing factors are studied, namely
collaboration between actors, logistic, quality of product and market demand. Firstly, the
collaboration between actors in the organic vegetable supply chain were studied based on trust and
commitment, and communication. Strong relationships and the high collaboration between actors in
a chain can result in the improvement of logistics and quality of the product. Secondly, the logistics
part which plays an important role in the general supply chain was studied. Transportation and storage
are two variables in the logistics part that could influence the quality of the product during the
distribution process from the organic farms in West Java to the market in Greater Jakarta area and
Bandung city (West Java). Thirdly, the quality of product consists of quality control and quality
assurance. To produce a high-quality vegetable product, the producer needs to perform regular
quality control. Those quality control will be under several regulations that give quality assurance to
the consumers. Four quality attributes (i.e. sensory, health, safety, process) were identified to describe
the consumers’ demand for the organic vegetable product. Thus, the quality of a product and the
logistics part could connect to the market demand.
Figure 3. Conceptual Framework
• Transportation • Storage
• Trust & Commitment
• Communication
• Quality Control • Quality Assurance
Quality of Product
• Sensory attributes • Health attributes • Safety attributes • Process attributes
Collaboration between Actors
Logistics
Meet the Market Demand
Organic Vegetable Supply Chain
16
3. RESEARCH METHODOLOGY
In this chapter, the methodology of the study is explained in further detail. The first section (3.1)
describes the research design, which this study follows. Furthermore, the study area is located in
Indonesia, about which more information is included in the second section (3.2). The last section (3.3)
contains the explanation of the study instruments and methods that are used in data collection and
analysis.
3.1 Research Design
A single case study with a qualitative approach is used as the research design. In order to answer the
research questions, a suitable amount of information was collected. Kumar (2011) states that a single
case study could provide an overview and an in-depth understanding of a case, as well as process and
interactional dynamics within a unit of study.
3.2 Study Area
The study is conducted in two provinces in Indonesia. First, the location for organic vegetable farms
in this study is in West Java, Indonesia. The first organic vegetable farm in Indonesia was established
in West Java in 1984. Since then, the province became the pioneer in the development of the organic
vegetable sector, and it has the highest organic vegetable areas among other places in Indonesia
(Jahroh, 2010). Second, most of the organic vegetable farms in West Java is targeting their product
towards entering the markets in urban areas. Thus, they are chosen as the location to investigate the
market demand for organic vegetable products. Greater Jakarta area consists of Jakarta, as the capital
city of Indonesia has the biggest market and the highest economic turnover in the country, and several
cities that surround Jakarta area, such as Bogor, Depok, Tangerang and Bekasi. Furthermore, the
consumers of organic vegetable products are mainly centralised in this province due to the higher
population of middle to higher income and well-educated households. It takes approximately two to
six hours by car from West Java to Greater Jakarta area, depending on the exact location of the farm
and the physical market.
17
Figure 4. The study area of three organic vegetable farms in West Java, Indonesia
3.3 Methods of Data Collection and Analysis
The respondents for this study are selected through the application of the sampling method presented
in section 3.3.1. Primary data sources is consulted to collect important information, which is then,
examined using comparative analysis.
3.3.1 Sampling
In order to determine the respondents, a non-random sampling design is performed. Snowball
sampling is a common non-random sampling that is used in qualitative studies. The researchers’
judgement is crucial to decide a few individuals who can provide characteristic and accurate
information in order to achieve the objective of the study. They are asked to identify other actors in
the chain; these actors also become a part of the sample. Data is collected until a saturation point is
reached. Thus, conclusions can be made even if only a small amount of data is available (Kumar, 2011).
Furthermore, three different chains that are used in this study are assumed to represent each type of
organic vegetable chain that is available in the sector. Three organic vegetable supply chains are
located in two regions in West Java province (i.e. Bogor and Bandung), which is close to Greater
Jakarta.
1) The first chain in this study is selected from an organic vegetable producer located in Bogor region,
West Java. The AOA farm is the pioneer in organic vegetable farm sector as it was established in
1984. The AOA chain currently applies the registered agents as the distributor for their organic
vegetable products. The registered agents are mainly the owners of specialised stores. However,
18
other registered agents also own organic food restaurants, food caterings, or online stores.
Furthermore, a supermarket in Greater Jakarta Area is also supplied by the AOA farm.
In order to gather information for this chain, two representatives from the AOA farm that include
the head of marketing division and the head of production division were interviewed. The head of
marketing division is responsible to manage the marketing and sales for the products, and the
communication between the farm and the registered agents. Meanwhile, the head of production
is responsible to manage the whole production of organic vegetable products in the farm, to
manage the farm labour and the partner farmers of the AOA. Moreover, a representative from the
TB supermarket and four representatives from registered agents, which include two owners of
organic specialised store, an owner of organic food restaurant, the CEO of an online store for
organic food, are interviewed to collect information about the AOA’s supply chain.
2) The second chain is chosen from the FE organic farm in Bandung city, West Java, founded in 2009.
The FE supplies their organic vegetable to several supermarkets, restaurants and the end-
consumers, which are located around Bandung city. In addition, the FE also supplies the products
to several supermarkets in Greater Jakarta Area from their partner farm in Tenjolaya, Bogor region,
which is within a closer distance to Greater Jakarta Area. One of the supermarkets is TB
supermarket. For this study, the owner of FE organic farm, a fresh products buyer from SB
supermarket in Bandung city, the head chef of THF restaurant in Bandung city, and a staff whom
responsible for fresh products in TB supermarket are interviewed.
3) The third chain focuses on the KSUGL cooperative in Cijeruk, Bogor region. This cooperative is
divided into two divisions, namely organic products division, and savings and loan division. The
KSUGL receives organic vegetables supply from the farmers around their cooperative and sells the
products to the consumers in RP School in Bogor city, West Java. Moeover, one of the KSUGL
members is an organic vegetable distributor who purchases the products from the same farmers
as the cooperative and from an organic vegetable farm close to the cooperative location. These
cooperative members distribute the organic vegetable directly to the end-consumers in Bogor city,
which are mainly households.
Thus, the respondents for this study are KSUGL staff (responsible for managing the organic
vegetable supply chain), a village farmers coordinator, a distributor (member of KSUGL), and a VB
farm manager (supplies organic vegetable products to the distributor).
In addition, several third parties that have knowledge and are involved in the organic vegetable supply
chain in West Java, Indonesia are interviewed. The third parties are selected in this study includes the
IOA, which is an NGO that has important role in the development of organic agriculture in Indonesia,
the BC organic certification body, the PMI which is a division in IOA that is responsible in establishing
19
a Participatory Guarantee System (PGS) for organic agriculture farmers and an academic. The IOA and
the academic have sufficient knowledge and information about the current state of organic vegetable
supply chain in West Java, and in turn assist in answering Research Questions 1 and 2. The organic
certification body and the PMI are interviewed to gather information regarding the quality of products
for organic vegetables which is included in the Research Question 2, 4 and 5. In total, the interview
will be directed towards 18 respondents from three different organic vegetable supply chains and four
external institutions.
Table 1. Overview of the respondents’ data
No
Code name
of the
respondent
Position
Code name of the
Company/
Institution
Duration
of the
interview
Date of the
interview
1 AN Head of marketing division AOA farm 02:13:07 15/12/2016
2 DD Head of production division AOA farm 00:30:40 15/12/2016
3 SS Owner FE farm 01:58:27 13/12/2016
4 EM Person-in-charge for organic
vegetable supply chain KSUGL cooperative
01:06:22 09/01/2017
5 MR Coordinator of organic
farmers in Cijulang village KSUGL cooperative
6 JI Manager VB farm 01:08:05 09/01/2017
7 SR Staff of vegetables division TB Supermarket 00:29:31 19/12/2016
8 VR Fresh products buyer for the
supermarket SB Supermarket 00:48:36 06/01/2017
9 SV AOA’s agent and owner of
specialised store Organic food store 01:11:44 21/12/2016
10 HR AOA’s agent and owner of
specialised store Organic food store 01:21:52 20/12/2016
11 JO AOA’s agent and owner of
ANO restaurant ANO Restaurant 01:36:10 23/12/2016
12 KN Head chef THF Restaurant 00:29:54 14/12/2016
13 TT CEO KC online store 01:10:22 18/01/2017
14 DN A member in KSUGL and a
distributor KSUGL cooperative 02:18:40 16/01/2017
15 AP Director BCI organic
certification body 01:23:54 07/01/2017
20
16 FM Staff PM (Participatory
Guarantee System) 01:15:37 11/01/2017
17 WY Academic BU (University) 02:02:30 12/01/2017
18 AR Staff IOA (NGO) 01:27:20 06/12/2016
3.3.2 Data Collection
Primary data is used to gather necessary information for this study. Furthermore, primary data is
commonly used in previous supply chain management studies, in which the information is collected
through a first approach (Kumar, 2011). Thus, semi-structured interviews are selected in this study
because the different professional, educational and personal backgrounds of the sample group
preclude the use of a standardised interview schedule. It aims to explore respondents’ opinions, clarify
interesting and relevant issues, elicit complete information and explore sensitive topics (Louise
Barriball, 1994). Furthermore, the interviews are conducted individually with each respondent from
three different types of organic vegetable supply chain. Several respondents from the third parties
will also be interviewed. An interview guideline that consists of open-ended questions is used to allow
flexibility for both the interviewer and the respondents. By using open-ended questions, the
interviewer can add relevant questions during the interview to gather additional information, whereas
the respondent can also provide as much information as they see fit. Rather than using a questionnaire
with a Likert-scale, an interview guideline is considered more suitable for this study.
3.3.3 Data Analysis
A comparative analysis is used to process all data that are gathered through semi-structured
interviews with three different organic supply chains. The market demand, quality of the product,
collaboration between actors and the logistics variables in each chain are compared, to find the main
contributing factor that creates a successful connection in an organic vegetable supply chain. The
information from the external parties is also be taken into account in the analysis. In the end, the
contributing factors that influence to the successful connection of organic vegetable supply to meet
market demand in urban areas can be adequately analysed.
21
4. FINDINGS
This chapter elaborates several findings on the current state and bottlenecks in the organic vegetable
supply chain in order to meet the market demand in West Java (i.e. Bandung) and Greater Jakarta.
The first section focuses on the existing market channel in the organic vegetable supply chain. The
current market demand will be described as the second finding in the following section. The quality
analysis of the product, a collaboration between actors, and current logistics flow in the organic
vegetables supply chain are explained in the third section. The last part describes the bottlenecks that
influence the successful connection in the organic vegetable supply chain.
4.1 Current Available Market Channel in Organic Vegetable Supply Chain
In this section, several producers had been interviewed to analyse the current market channel that
available in organic vegetable supply chain in West Java with West Java (i.e. Bandung) and Greater
Jakarta area as market. The first market channel that will be analysed in this section is AOA Chain
(Section 4.1.1). The FE chain is analysed further in subchapter 4.1.2 and the KSUGL in section 4.1.3.
4.1.1 Description of AOA Chain
The AOA is the pioneer in organic vegetable sector which has been established for almost 33 years.
Hence, several changes had been done before the AOA set the current market channel that suitable
with the AOA’s organic principle. The increase of demand encouraged the AOA to start selling the
organic vegetables to the bigger market, particularly major supermarket mainly which were located
in Greater Jakarta area. Those supermarkets were the major players in supermarket business with
hundreds of stores throughout Indonesia, ultimately Greater Jakarta as the biggest market area. The
consignment sales that is commonly used as the transaction system between a big retailer and its
supplier was not in line with the AOA’s organic principle. Even though the demand for the organic
vegetables was high, the AOA found that the losses from trading with the supermarket were greater
than the profit they gained. Organic vegetables are a perishable product with short shelf life. However,
in the consignment sales, the supermarket will pay the producer based on the total sales of the
vegetables. For the vegetables that are not sold, the supermarket will return them to the producer.
The returned vegetables are likely have lower quality that long journey. Thus, eventually they might
no longer be sold to the end-consumers. The AOA considered the consignment sales could not give
fair trade for both parties. The AOA decided to end the partnership with the supermarket, even though
the demand was high.
22
As the trade with the supermarket had been stopped, the AOA was implementing the registered
agent's system for the new market channel. The registered agent's system is still valid at present.
Based on that system, the AOA only sells the organic vegetables to the person that already registered
as AOA’s agent. This person could be a distributor, the seller of the specialised store, the owner of a
restaurant, a supermarket or the end-consumer who agrees to do the fair-trade practice. Fair trade
means that the registered agents will not return the vegetables to the AOA due to damage or low
demand. However, the registered agent has the privilege to accept or to reject the organic vegetables
based on their quality. When the registered agent agreed to purchase the organic vegetables, they
will receive a bill from the AOA stating the quantities of the products they received. Hereafter, the
organic vegetables are under the responsibility of the agents.
Actors’ Profile
During the data collection, AN, SV, HR, SR and JN had been interviewed. At first, AN as the head
of marketing division of AOA recommend several agents that actively involved in the organic
vegetable supply chain. SV and HR are the representatives of agents that establish a specialised
store in organic products. SR is an employee in TBS that responsible in managing all the
vegetables in the supermarket. However, JN is the owner of ANO restaurant which is supplied
by the AOA. The following section will be explained about the profile of actors in the AOA chain.
Table 2. Overview of the Respondents' in AOA Chain
No COde name of the
respondent
Position Company/
Institution
1 AN Head of marketing division AOA
2 DD Head of production division AOA
3 SR Staff of vegetables division TB Supermarket
4 SV AOA’s agent and owner of a specialised store -
5 HR AOA’s agent and owner of two specialised
store
-
6 JN AOA’s agent and owner of ANO restaurant ANO Restaurant
7 TT Director KC
23
AOA
The BSBA Foundation known as the
pioneer in organic vegetables
farming in Indonesia. It is established
by Priest Agatho Elsener in 1984. This
foundation has committed in the
developing of organic vegetable
farming since then. Priest Agatho was
a Christian missionary from Sweden
who had a high concern regarding
organist principle and organic farming,
respectively. In 2016, the BSBA Foundation established PT AOA which focuses on the
organic vegetable business in general, including the organic vegetable farming, the
marketing process, and the product supply chain. In order to collect the relevant data from
the AOA, AN (marketing head division), and DD (production head division) had been
interviewed. The AOA is located in Cisarua, Bogor (West Java).
Organic vegetables are mainly produced on the producer’s farm. The farm has 8 hectares
of land area which includes a three-floors building for training, office and sortation and
packaging, one building for training division, one building for the seedling process, and one
building for the employee housing. The rest of area is for the plantation. Most of the AOA’s
organic vegetable production comes from the farm owned by the producer. Recently, the
high demand for organic vegetables drives the AOA to establish a partnership with small
farmers from around Bogor region.
Specialised store
Several registered agents of the AOA
are the owner of the specialised store
for organic foods. Hence, two agents
were interviewed to collect the
information regarding the AOA’s
chain. First, HR who is one of the first
agents that involved in the AOA
organic vegetable supply chain. He
helped the AOA to change the past
marketing channel with the big retailers
Picture 1. Interview with AN from the AOA Source: Author
Picture 2. Interview with HR Source: Author
24
and established the register system. HR owned two specialised stores which are located in
Menteng area and Puri Indah area, Jakarta city.
The second agent who owns one
organic food store in South
Tangerang (around southeast of
Jakarta city). SV has been involved in
the organic vegetable supply chain
since 2002. At first, SV intention was
only to consume the organic
vegetables for health reason. The
high demand and the big
opportunity to sell the organic
vegetables became the motivation
for SV to open a specialised store. SV stated that most of the consumers were specifically
asked for AOA’s organic vegetables. Thus, due to AOA’s image as the first producer of
organic vegetables, SV started to purchase the organic vegetables from the AOA.
In comparison to SV, HR had more benefit because of his long collaboration with the AOA
and its higher number of store. Based on the interview with AN, supply for organic
vegetables is higher for HR. HR receives a supply four times a week, while SV receives a
supply for two times a week.
TB supermarket
AOA representative mentioned in the interview that they had stopped the partnership with
a major supermarket in Greater Jakarta area due to the lack of fair trade. However, TB
supermarket offers a fair trading to the AOA by not implementing the consignment sales.
The trading between the TB supermarket and the AOA gives the supermarket benefit due
to the AOA’s image as the pioneer of organic vegetable producer in Indonesia. Many
consumers have been familiar with the AOA’s organic vegetable products which influence
to the high demand for the products. Hence, the TB supermarket has been supplied by the
AOA.
TB supermarket is a medium-scale supermarket that mainly based in Greater Jakarta. It
focuses on selling vegetables and fruits in both organic and conventional. The consumers
are mostly middle to higher class consumers. Based on the interview with SR, the reason
for the supermarket to sell organic vegetables is to fulfil the consumer demand. In TB
Picture 3. Interview with SV Source: Author
25
supermarket, both organic and
conventional vegetables are available
on their shelves to capture all the
consumer demand and to distinguish
the supermarket from the traditional
market. TBS has been selling the
organic vegetables since 2012.
In order to gather information about
the supermarket, SR which is the TB
supermarket’s employee had been
interviewed. SR is responsible in all the
process related to vegetable division in the supermarket. Her task includes ordering the
vegetables from the suppliers, communicating with the suppliers, receiving, sorting,
weighing the vegetables, placing it on the supermarket shelves, calculating the vegetables
that have been sold and taking care of the leftovers.
ANO restaurant
The current trends show the growth of organic food restaurant in the Greater Jakarta area.
ANO is a restaurant which also sells fresh organic vegetable products to the end-
consumers. ANO is located in the housing area in Tangeragn city, Greater Jakarta.
According to AN (the marketing manager of AOA), the restaurants that has been supplied
by the AOA since it was established in 2014.
Moreover, JN (the owner of the ANO)
mentioned that the restaurant-cum-
store was created due to his concern
on healthy food. Organic food was
used for self-consume. The choice of
received supply from the AOA was
based on the AOA’s high reputation
amongst the organic vegetable
consumers. As the pioneer, many
consumers have been consuming the
AOA’s organic vegetable products and
the demand is stable for their products.
Picture 5. Interview with JN Source: Author
Picture 4. Interview with SR Source: Author
26
Distributor for online store
The awareness of organic farming and sustainability increase amongst the vegetable
consumers in urban areas. KC was founded as an online platform to support trading for
organic foods in Greater Jakarta area in 2015. KC is considered to be one of the pioneers in
the online store for organic vegetables. KC has carried out intensive researches regarding
the organic vegetable supply chain. For that reason, the KC’s system was adopted and
modified from the US and France system. According to the interview with TT who is the
Co-CEO of the K, the digital systems could be an alternative access that shortens the supply
chain from the producers to the end-consumers. To sell the organic vegetables to the urban
areas is considered new in the organic vegetable supply chain in Indonesia.
The interaction with organic vegetable producers in the period of 2014 to 2015 brought KC
to start the partnership with the AOA. The AOA’s reputation as the pioneer in organic
vegetable sector became the main reason for the K to order the supplies from the
producer. Moreover, the K and the AOA did not use the consignment sales for its trading
system. Instead, the K purchase the products from the AOA based on the quantities they
received, without applying any return policy.
The AOA’s market channel in the Organic Vegetables Supply Chain
Based on the interview, the market channel for the organic vegetable supply chain in the AOA
has been formulated. Compared to other producers who do not restrict their consumers to
register to purchase the organic vegetables, the AOA will only supply their organic vegetables
to their registered agents. Due to that reason, people who are not registered cannot purchase
the products directly from the AOA. Thus, the producer can ensure the fair trade with the
registered agents. Consequently, the communication can be developed more efficiently
between the producer and the registered agents which eventually improves the product quality
and the logistics.
To summarise, the registered agents are further divided into four channel. Firstly, individual
registered agents who are commonly the owner of the specialised store for organic food
products. Secondly, the AOA only supply their product for one supermarket which is TB
supermarket. Thirdly, the AOA also supplies some restaurants. For this channel, the organic
vegetables have been processed into several Indonesian meals and salads. The last market
channel is an online distributor that later distribute the organic vegetables to their agents. The
organic vegetables that received by the agents will be picked up by the end-consumers.
27
Among several AOA’s market channel, the highest purchase came from the individual registered
agents who sell the organic vegetables directly to the end-consumers through their specialised
store. According to the interview with AN from the AOA, the high number of registered agents
who own the specialised store and the long duration of partnership between the AOA and thus
registered agents makes the first market channel important for the AOA. Hence, the AOA’s
market channel in the organic vegetable supply chain is described in Figure 5.
Figure 5. The flow of AOA organic vegetables supply chain.
4.1.2 Description of FE Chain
In the FE chain, the producer focused on supplying the organic vegetables around the Bandung city
and Greater Jakarta area. However, in this study, the FE chain is located in Bandung city (West Java).
In this part, several actors had been interviewed to collect the relevant data regarding the organic
vegetable supply chain. Two supermarkets which are supplied by the FE including TB supermarket and
SB supermarket. Furthermore, the FE has provided their products to several restaurants around
Bandung city. THF restaurant is one of the restaurants that has been supplied by the FE since 2013.
Actors’ Profile
The FE sells organic vegetable products mainly in Bandung area, West Java. They focused on the
local market with shorter supply chain compared to the conventional vegetable supply chain.
SB is a premium class supermarket that has been supplied by FE. As a representative of SB, VR
was interviewed to gather the information. SR is the representative of TBS in Jakarta. FE delivers
the organic vegetables from their farm in Bogor, West Java to fulfil the demand of Jakarta
The AOA
Individual Registered Agent (Specialised store)
The end-consumer
Online distributor
(KC)KC's Agent The end-consumer
Supermarket
(TBS)The end-consumer
Restaurant (individual registered agents)
(ANO)
The end-consumer
28
market. Thus, they could keep the chain shorter. The FE also supply their product to several
restaurants. One of them is THS in which KN works as the main chef and become the
interviewees of this study. The profile of actors involved in FE supply chain will be explained
further in the following section.
Table 3. Overview of the Respondents' in FE Chain
No Code name of the
respondent
Position Company/ Institution
1 SS Owner FE
2 VR Buyer for vegetable products SB Supermarket
3 SR Staff of vegetables division TB Supermarket
4 KN Head chef of THF restaurant THF Restaurant
FE
In 2009, the FE was founded by SS and
DR in Bandung, West Java. During the
early years, they explored and studied
in depth about organic from academic
sources and leading organic
institutions which led them to the
intense discussion. They finally found
their passion in organic vegetables.
Their vision is to promote both
healthy people and environment.
Meanwhile, their missions’ compromise
of inspiring people towards healthy and organic attitudes, becoming a role model of
organic edible garden and ethical organic farming, protecting consumers’ interest on
organic quality through education and consumption. To achieve the vision and mission,
they have a commitment to ethical and moral of organic farming, good production and
working environment, as well as healthy and sustainable ecosystem. Thus, they are two
fundamental factors that need to be implemented, namely competency and trustworthy.
From the interview, it was noted that FE has two organic farms. The first farm is located in
Parongpong, West Bandung. It is owned by SS and DR to fulfil the demand from
surrounding Bandung region. However, another farm in Tenjolaya, Bogor is owned by
Picture 6. Interview with SS Source: Author
29
TVMS which establishes a partnership with FE and agree to follow their vision and mission.
The FE Tenjolaya farm offers the organic vegetable supply for Greater Jakarta market. It is
in line with FE’s concern to cut the distance between the farm and the market.
SB supermarket
Since approximately five to six years ago, SB supermarket has been selling organic
vegetables. Based on the interview with VR, firstly there were some demands of organic
vegetables from two consumers. The supermarket noticed that and then tried to fulfil it.
The demand has been increasing lately due to the higher consumers’ awareness and easy
access to the internet. To provide that, the supply of organic vegetables is increasing. VR is
the buyer of ST supermarket who responsible for managing the trading process with the
producers (FE).
TB supermarket
TB supermarket focus on selling vegetables and fruit market in Greater Jakarta area. They
offer both organic and conventional vegetables to fulfil the consumer's demand. SR is
interviewed to have an in-depth view of the elements in organic vegetables in the
supermarket. She is responsible for the vegetable division of the supermarket. One of the
organic vegetable suppliers is FE. They deliver the products from Tenjolaya farm due to
proximity.
THF restaurant
The THF restaurant has been opened since December 2013. KN started to work as the head
chef in 2014. The THF is located in Sukajadi, Bandung which is 4.8 Km from the FE store in
Sarijadi, Bandung city. Chemical-free and nutritious content of organic vegetables became
the main reasons for the restaurant to use in organic products in their foods. The THF buys
the organic vegetables from local producers around Bandung area, such as FE. Thus, they
can easily check the quality of vegetables by knowing the sources. Moreover, it also
increases the brand image for the youths by offering delicious and healthy foods.
The FE’s Market Channel in the Organic Vegetables Supply Chain
The FE has supplied the organic vegetables to the supermarket, restaurant and the end-
consumers. However, their concern to distribute the products to the local market has made the
market divided into two areas. The first market area for the FE is located in Bandung, West Java
where the organic vegetables are supplied from the FE’s Parongpong farm. The first channel
30
distribute the organic vegetables to the several supermarkets, restaurants, and to the end-
consumers (e.g. households). For the second market area, the FE supply the organic vegetables
from the Tenjolaya farm in Bogor to the supermarkets in Greater Jakarta area. The Tenjolaya
farm is selected due to it is proximity to market area.
However, the first market channel is directly under supervision of SS and DR (the owner of the
FE) during the daily process of organic vegetable supply chain. Thus, the development of the
first market channel is rapid compared to the second market channel. In the first market
channel, the FE has supplied the organic vegetables to more various channels. The market
channels of the FE supply chain have been summarised in Figure 6.
Figure 6. The flow of FE organic vegetables supply chain.
4.1.3 KSUGL Chain
The KSUGL is a cooperative that focuses on organic products business, saving and loan. Regarding the
organic vegetable supply chain, the KSUGL has affiliated with small farmers from Cijulang village,
Cijeruk, Bogor. MR is an organic vegetable farmer and a member of KSUGL who interviewed for the
purpose of data collection. However, DN (a member of KSUGL and organic vegetable distributor) also
collects the organic vegetables from the Cijulang village farmers and sells the products through his
supply chain. Aside from the Cijulang village farmers, DN also received a supply of organic vegetables
The FE
ParongpongFarm
FE warehouse
Supermarket
(SB)
The end-consumer
Restaurant
(THF)
The end-consumer
The end-consumer
(online)
TenjolayaFarm
Supermarket
(TBS)
The end-consumer
31
from VB farm that located in Cijeruk area. The respondent JI (manager of VB farm) had been
interviewed.
Actors’ Profile
KSUGL is an organic cooperative located in Bogor, West Java. They collect organic vegetables
from farmers around the cooperative and sell it to Bogor city. In order to collect the relevant
data, several farmers that supply the organic vegetables to the cooperative has been
interviewed. The contact person were MR and JI. Meanwhile, EM (the person-in-charge for
organic vegetable supply chain) and DN (a distributor and a member of the cooperative) were
interviewed.
Table 4. Overview of the Respondents' in KSUGL Chain
No Code name of the
respondent
Position Company/
Institution
1 EM Person-in-charge for organic vegetable supply
chain
KSUGL
2 MR Organic farmer in Cijulang village KSUGL
3 JI Manager of VB VB
4 DN A member in KSUGL and a distributor KSUGL
KSUGL
The KSUGL is an organic cooperative
that established in 2007 with the aim
to help the women in Cijeruk, Bogor,
to increase the capacities regarding
knowledge, skills, and income for
their households. It also helps the
women to be independent. KSUGL
divided into two division which
consists of saving and loan, as well as
organic products business. At the
beginning of the cooperative, the
members reached 450 peoples who currently reduced significantly to only 138 members
in 2016. In relation to the organic products business, the human resources are limited. One
Picture 7. Interview with EM Source: Author
32
contact person was interviewed, namely EM (responsible for the whole organic vegetable
supply chain process).
Organic Farmers
After resigning from his previous job in
a shoe company in 2011, MR became
an organic vegetable farmer. He later
becomes the member of KSUGL and
works as the cooperatives’ person in
charge for the organic vegetable
farmers in Cijulang village, Cijeruk,
Bogor. MR is responsible for managing
the organic vegetable process among
farmers, for instances coordinating the
planting schedule between the farmers,
sharing information and knowledge with other farmers, and coordinating the
communication between the cooperative and the farmers. In addition to that, MR is also
responsible for managing his farm and supplying the organic vegetable to the cooperative.
Another organic farmer that has been interviewed was JI from VB. VB is a villa located in
Cijeruk, Bogor, specifically on the slopes of Mount Salak. It can be accessed in a less than
an hour from Bogor toll exit. VB offers several services such as accommodations, outbound
facilities, and organic farm. As a general manager, JI is responsible to manage finance,
human resources, maintenance of the facilities and security. Moreover, he has to
accommodate the guests. JI had supplied the organic vegetables to KSUGL before.
However, these days JI only delivered the vegetables to DN, who is a distributor and a
member of KSUGL.
DN (distributor)
DN is a distributor and also a member of KSUGL. Previously, he was actively involved in
KSUGL as a member of the board. However, after the election board in December 2016, he
resigned from the cooperative board and became an ordinary member of KSUGL. Thus, he
signed a contract with the KSUGL and paid contribution fee to KSUGL. By doing that, he
Picture 8. Interview with MR at his farm Source: Author
33
was allowed to collect the organic vegetables from KSUGL farmers. The farmers that supply
the organic vegetables to DN are Cijulang’s farmers and JI.
The KSUGL’s Market Channel in the Organic Vegetables Supply Chain
The market channel of the organic vegetable supply chain in the KSUGL has been divided into
two categories. For the first category, KSUGL collects the organic vegetables at the pick-up point
in Cijulang village in which the farmers are gathered all their products for the cooperative.
KSUGL distributes the organic vegetables to the cooperative office for sorting and packaging
processes. On the following day, KSUGL sells their product in Bogor, particularly in front of the
RP School.
For the second category, KSUGL is indirectly involved because DN is the member of the
cooperative. In this case, JI and farmers in Cijulang village supply the organic vegetables to DN.
For farmers in Cijulang village, DN will collect the vegetables directly from the farmers.
However, JI has to deliver vegetables to the cooperative which later will be picked up by DN. On
the following day, DN will deliver the vegetables to the end-consumers.
Among those two market channel, KSUGL priorities the first market channel because the
cooperative is directly involved in the organic vegetable supply chain process. While for the
second market channel, KSUGL does not have role in the supply chain process. Even though DN
is the member of the cooperative, the supply chain process is separated from KSUGL. The
market channel of the KSUGL’s organic vegetable supply chain can be described as in Figure 7.
Figure 7. The flow of KSUGL organic vegetable supply chain.
4.1.3 Third Parties
Several third parties have been interviewed in order to gather opinions and experiences regarding
current state of the organic vegetable supply chain in West Java (Indonesia), especially in quality of
product and market demand. The third parties that were interviewed in this study were an organic
certification body, a PGS organisation, a NGO specialised in organic agriculture and an academic. The
organic certification body and the NGO have important roles in the development of organic agriculture
Cijulang Village Farmers
KSUGL cooperative The end-consumers
(at RP School)
Distributor (DN) The end-consumers
VB Farm
34
in Indonesia as they have been established since 2002. They could be considered as the pioneers in
the development of this sector. Meanwhile, PMI is considered as a new comer. The organisation is
currently trying to set up a system in which can recognise the quality of the organic vegetable
produced by small farmers even though the farmers do not follow the organic certification body. The
academic as the third party has a role which is related to the research of product quality and market
demand for organic vegetable in the urban areas. The profile of the third parties are describe in this
section.
Actors’ Profile
In this study, two organic certification bodies; (i.e. BCI and PMI) had been interviewed to collect
information about the requirements and processes to receive organic vegetable certification.
In order to collect general information about organic vegetables supply chain in Indonesia, IOA
(NGO in the organic agriculture sector) and WY (academic lecturer and researcher) were
interviewed. The overview table of the respondents could be seen in Table 5.
Table 5. Overview of the Third Parties
No Code name of the
respondent
Position Company/
Institution
1 AP Director BCI Organic
Certification
2 FM Staff of PM division PMI (IOA)
3 AR Staff of marketing division IOA
4 WY Academic BU
BCI
As one of the leading organic certification body which was established by IOA, BCI has been
involving in organic agriculture sector since 2002. In 2006, BCI was accredited as organic
certification body under ISO 17065 by National Accreditation Committee of Indonesia. BCI
was also accredited by IOAS as organic certification of EU equivalence and Canada Organic
Regime. BCI carries a vision to be a trusted company in Southeast Asia to ensure
sustainable performance and ethical practices in the company. In order to successfully
achieve the vision, BCI commits to help and facilitate organisation, company or groups of
a partner realising sustainable productivity and achieving the highest level of performance
in environmental protection, social responsibility, safety and quality of products.
35
Moreover, BCI focuses on encouraging them to apply accountability principles,
professionalism and sustainable cycle in every initiative and improvements which are in
line with sustainability standards (Biocert, 2015).
AP has joined BCI since 2002. Currently, he is the director of the institution. He is
responsible for leading the auditor team, inspector team and verifier team for organic, UTZ
Certified, Rainforest Alliance, 4C, CAFÉ Practices and ETP. He has some experiences in
auditing the organic certification in Indonesia, Papuan New Guinea, China, and Vietnam.
AP was interviewed about the role of BCI as the institution that released the organic
certification for AOA. The organic certification for AOA was valid from April 14th, 2014 to
April 13th, 2017. Now, it is under the process of the renewal (Biocert, 2015).
PMI
A national workshop involving numerous organic agriculture stakeholders (i.e. producers,
consumers, traders, NGO and academics) in 2008 has formed an alternative program to
assure the quality of organic agriculture product under the name of PMI. PMI is a
Participatory Guarantee Systems (PGSs) applied in Indonesia and recognised by IFOAM.
According to IFOAM (2008), PGSs are quality assurance initiatives that locally relevant and
emphasise the participation of organic agriculture stakeholders (i.e. producers, consumers,
third party certification). Four basic elements in PGSs includes a participatory approach, a
shared vision, transparency, trust and a non-hierarchical structure. PGSs are born from a
group of people who realise the benefit of having an organic guarantee. This guarantee
could provide recognition in local markets without having constraint from the third party
certification (i.e. compliance requirements and costs) (IFOAM, 2008). PGSs is focused on
the local market, while third party certification is targeted for a bigger market that located
far away from producers (e.g. export markets). In terms of technical aspects, PGS and third
party certification share similarities which they both have collective certification tools,
standards, mechanisms for verifying compliance, documented management procedures
and a farmer’s pledge and seals (IFOAM, 2008). There is not one set of rules which must be
followed by all PGS. On the other hand, the key stakeholders are driven to engage in the
design and operation of the PGS through the ownership and process control that is coming
from inside the overall group (IFOAM, 2008).
FM (staff of PMI) stated that small producers could not afford the organic certification due
to the high cost. Therefore, small producers were unable to sell their organic products to
36
the domestic market. Yet, the Indonesian government has not acknowledged the existence
of PMI as a PGS for organic producers in Indonesia.
“Therefore we adopted the PGS and changed it with a new name PMI. We
introduce this new system to the small producers so that they can sell their
products to local market. Until now, the Indonesian government has not
acknowledged the existence of PMI as participatory guarantee systems for
organic producers.”
PMI had 13 units in 2015 with 500 small producers and 117 big producers that registered
as the PMI’s members. In order to apply for PMI organic certification process, the producer
can contact the closest PMI unit. Then, the PMI unit team will assess the certification
process and verify the product. Afterwards, IOA will release the certification and the
products have been officially recognised as organic.
IOA
In April 2002, IOA was established as a civil society organisation which was based on
membership. IOA had 117 members, including 80 institution and 37 individuals from 20
provinces in Indonesia. Four main programs of IOA are;
1. Strengthen the institution and quality of the production in small farmers to access the
market
To achieve the first program, several interventions have been implemented by
strengthening the facilities of market access, protecting the small farmer; through
harmonising some standards (i.e. organic, social, fair trade, environment), and
developing a participatory guarantee system. The main activity of the first program is
to develope and implement an internal control system that is included in the organic
certification scheme for farmer group. Moreover, IOA provides financing scheme for
fair trade, the product’s quality improvement program, marketing and financing
certification. Therefore, IOA founded PMI in 2008 as the participatory guarantee system
for farmers.
2. Advancing the organic agriculture movement and fair trade
IOA provides basic data for organic agriculture, campaign and organist education,
organic agriculture research, develops the network and policy, facilitates information
and market access for organic product and fair trade. In 2009, IOA thus published the
Statistic for Organic Agriculture in Indonesia (SPOI). This publication contains data of
37
the organic agriculture development in Indonesia. On top of that, IOA also regularly
holds the exhibition, seminar, discussion and another type of campaign related to
organic agriculture and fair trade.
3. Developing independent services in organic agriculture and fair trade
The third program focuses on establishing quality assurance services (i.e. BCI and PMI),
training and consultation (i.e. ICS) and publication (i.e. ORGANIC magazine).
4. Strengthen the coordination and implementation of IOA programs with the members
within national and international networks
The coordination of national programs has been done through all the IOA members that
scattered around Indonesia. IOA establish a partnership with JMHI, WWFI, and BFTW.
In international level, IOA actively contributed through IFOAM and Organic Asia Forum.
IOA has been the member of IFOAM since 2007 and becomes the vocal point of IFOAM
in Indonesia.
To collect the data from IOA concerning the current state of organic agriculture in
Indonesia, AR (representative of IOA) was interviewed. He was previously responsible
for marketing, quality assurance and external communication for IOA. He is now a
coordinator in fundraising and partnership division in IOA. His main task is to connect
the people who interest and support the organic agriculture sector and have interest in
IOA programs. IOA is a non-profit organisation which depends on financial support from
the donor.
“The activities that I conducted in fundraising division were aimed to connect
and facilitate institutions that wanted to support organic agriculture
development through certain programs as well as to provide funds to
producers in Indonesia. We could also assist the organisation and companies
which need supervision to develop organic agriculture programs for
producers.” (AR, 2017)
Academic
To collect data about market demand for organic vegetables in Indonesia from research
and academic perspective, WY had been interviewed. WY is currently active as a faculty
member of Food Science and Technology in BUI, and a managing editor of Asia Pacific
Journal of Sustainable Agriculture Food and Energy. He is also a member of several
professional associations; for example, International Society of Organic Agriculture
Research (ISOFAR), Indonesian Association Food Technologists, and Sustainable
38
Agriculture, Food and Energy (SAFE) Network. In 2011, he obtained Doctoral degree in the
field of Organic Food Quality and Food Culture from Universitaet Kassel (Germany). He
published several publications related to organic vegetables, such as: local food security
and the principle of organic farming (from farm to fork) in the context of food culture in
Indonesia: Minangkabau case study in 2011, and organic agriculture in Indonesia:
challenges and opportunity in 2016.
4.2 Current state of Organic Vegetables Supply Chain
In this chapter, the observed current state of organic vegetable supply chain in the West Java will be
described. The chapter will be divided into three sections based on the three variables in this study
(i.e. quality of product, the collaboration between actors, the logistic). The first section 4.2.1 is
explaining about the quality of product. It is followed by the by collaboration between actors in section
4.2.2 and the logistic in section 4.2.3.
4.2.1 Quality of Product
This section will be sorted into three parts which are explaining each supply chain state. First part
refers to the AOA chain, followed by the FE chain and then KSUGL chain. Firstly, the definition of
product quality is based on Luning & Marcelis (2009). From this definition, the quality of product is
focused on the quality control that has been applied by the producers in order to produce high quality
organic vegetables and proper quality assurance. The comparison of three supply chain can be seen
on Table 6.
39
Table 6. The Current State of Product’s Quality in Organic Vegetable Products
No Variables AOA Chain FE Chain KSUGL Chain
From Cijulang Farmers VB Farm
1. Quality control:
Pre-harvesting process
Implementing an integrated production plan and forecasting system
Seedling several local vegetable seeds
Pre-treatment for non-organic seeds by soaking in the water for approx. 30 min. While the organic seeds can be planted directly without soaking process
Organic fertiliser is made from the fermentation of manure, soil and straws mixture
The water source is filtered by using papyrus plants in a pond before using it to watering the plants
Polyculture system
Manually remove the pests
Organic pesticides is given only if it is necessary and cannot be solved manually
Hedgerows and repellent plants grows around the farm to prevent the distribution of pests from other farms
Regular rotating farming system
Implementing an integrated production plan and forecasting system
Use import seeds
Manually remove the pests
Organic pesticides is given only if it necessary and cannot be solve manually
Indoor (i.e. greenhouse) and outdoor farm
Regular rotating farming system
Start to implement an integrated production plan and forecasting system
Seedling several local vegetable seeds
Purchase vegetable seeds that cannot be seedling by themselves
Use ground water to watering the farm
Compost is used as the organic fertiliser with the mixture of goat manure, chicken manure, rice straw and the remnants of vegetables
Polyculture system
Hedgerows and repellent plants grows around the farm to prevent the distribution of pests from other farms
The organic pesticides is made from the mixture of water and tobacco leaves to repel the pests (given when necessary)
Implementing a forecasting system
Organic fertiliser made by mixture of 5 sacks of the waste of goat’s feed, five sacks of goat manure, one sack of mixture of husk and chicken manure, and the grass which has been grinded before the fermentation process
Beans, long beans, carrot and spinach has been seedling by themselves
Purchase other varieties of vegetable seeds from AOA and Mr. A (owner) who supplies seeds for salad vegetable
Polyculture
Manual treatment for pest control
Spread the seed to the plots
For several vegetables, it grows in the polybag first before move to the plot
Harvesting process
Harvesting takes six days a week (Tue-Sun)
Manual harvesting process (i.e. hand)
Harvesting takes everyday
Manual harvesting process (i.e. hand)
Manual harvesting process Harvesting process takes in the morning
Harvest 35 plots of vegetables per week
Manual harvesting process
Post-harvesting process
A big wood basket use to distribute the product from farm to the sortation centre
The vegetables are cleaned two times
The vegetables sort into grade A and B
Weighing process (250 gr/package)
Packaging with plastic bag and labeling with AOA’s sticker
The vegetables is kept in a box during the distribution from the farm to the warehouse
Two times of product’s cleaning process; in the farm and in the warehouse
Two types sorting products (i.e. Fresh vegetables and Salad)
Plastic bag is used as the packaging with FE label at front
The vegetables sort by its quality in terms of low damages
There is no grading in vegetables
Clear plastic bag use as the package
Price label is putted on the package without brand information
One time of product’s cleaning process
The vegetables sort by its quality in terms of low damages
There is no grading in vegetables
2. Quality assurance
Under supervision of BCI Member of IFOAM and PMI Starting to use PMI No certification
3. Quality attributes
High freshness and chemical free content Sweeter taste, fresh color, similar form and shape, low rates of holes and damages, low rates of animal insects, freshness and crisp sounds, free-chemical content)
Need longer time to rot (3-4 days compared to conventional) which indicated by withered leaves
Crunchier, clean
38
AOA Chain
The AOA’s definition for quality of organic vegetables based on quality attributes
According to interview with the respondents
from AOA (i.e. AN), the high-quality standard for
organic vegetables requires the freshness,
minimum damages (e.g. few holes, few insects
and free from chemical residues). The shape and
form of the product do not have to be
standardised. AN stated that there is no
significance difference in the taste between the
organic and conventional vegetables. The
consumers relates the high-quality products to
the chemical-free content and product’s
freshness. According to the interview, the AOA
agents stated that both the agents and the end-
consumers have knowledge and information
about the characteristic for the organic vegetable
products due to long-time relationship with the AOA. The rapid technological development in
the past years (specifically internet) has made the end-consumers can conveniently access the
information regarding the quality of organic vegetables. To fulfil the consumers’ demand for
the product quality, AOA communicated with all the agents regularly and responded to the
complaint by directly improved their quality production. However, weather condition has a
strong influence to the improvement on quality of the organic vegetables.
Quality Control
In order to produce high quality standard for the organic vegetables, certain quality controls
need to be performed by the farm. Pre-harvesting, production, harvesting and post-harvesting
processes are included in the quality control system.
Pre-harvesting process
In order to produce high-quality products and prevent the vegetable pest without using
chemicals, the organic vegetable production in the AOA farm required an integrated
Picture 9. The AOA's quality standard for the organic vegetables
Source: Author
39
production plan and
forecasting system. For
several varieties of seeds
that are imported from
other countries and unable
to be grown in Indonesia,
they need to be soaked for
approximately 30 minutes
to reduce the chemical
residues in the seeds. This
step needs to be followed as
it is written in the organic
certification standard rules. The local seeds which h could be cultivated in the farm do not
need to be soaked. AOA has been seedling several varieties of local seeds as a means to
reduce the possibility of chemical contamination and the costs from purchasing the seeds.
The seeds are moved to the plot which added with the organic fertiliser from the
fermentation of manure, soil and straws mixture. Additionally, the water resource, water
filter should be filtered by using papyrus plants. Thus, the chemical input in the organic
vegetable farming can be suppressed.
AOA uses polyculture for the organic vegetable farming system, rather than monoculture
which is common in conventional agricultural farming. By using polyculture system, AOA
plants three different vegetables in one crop from different families which are harvested in
different time (e.g. carrot, lettuce and broccoli). Instead of using the chemical pesticides, the
AOA farm uses manual method (i.e. using hand) to remove pests from the vegetables. The
organic pesticides that have been made by the farm will be applied to vegetables only if it is
needed, for example when the number of vegetables that has been attacked by the pests
are higher than the farm expectation. DD (responsible for the production division) in the
AOA stated that if the production could be done without using any organic or conventional
pesticides, it would have been better for them. It is owing to the intention of applying the
organic principle to lower the possibility to kill the animals and insects.
Several methods to prevent the pest attack during the severe condition has been applied in
the AOA farm. The hedgerows and the repellent plants are planted around the farm to
prevent the distribution of pests from other farms. Furthermore, AOA increases the quality
of the farming system by implanting integrated production plan and intensive care. It
Picture 10. The AOA's employee planting the vegetable seeds Source: Author
40
requires the farm to rotate their harvesting time for each variety of vegetables. The crop
that has been harvested will be replaced with other variance of vegetables that different
from the three previous vegetables. As a result, this method will helps to prevent pest’s
attack to particular vegetables.
Harvesting process
The harvesting processes are held every Tuesday to Sunday. The integrated and effective
planting plan need to be implemented to have a precise weekly harvesting forecast.
Therefore, AOA could accurately inform their agents regarding the organic vegetables that
will be harvested in the following two days. Furthermore, to avoid damages and unnecessary
harvested vegetables, manual harvesting should be employ. AOA employee could check
whether the vegetables ready to harvest and also to avoid the injury in the product.
Post-harvesting process
The harvested vegetables are placed in the
big wood basket and distributed to the
sorting location on the ground floor of the
AOA office. The vegetables need to be
cleaned two times with clean ground water
prior to sorting process. This is done to
prevent the attachment of remaining dirt
on vegetables. Furthermore, the
vegetables are sorted into two grades,
namely grade ‘A’ and ‘B’. The grade ‘A’
aims to fulfil the registered agent's order,
while the grade B usually processed into
secondary products. The organic
vegetables are packed into 250 gr
transparent plastic bag to preserve their
quality. Each plastic bag is attached with a
sticker containing AOA’s name and logo.
Quality assurance
AOA is implemented under the supervision of BCI, which is a known organic certification body
that located in Bogor (West Java). The organic vegetable certification has been released in the
beginning of 2016. BCI regularly checks all matters related to the organic vegetables, ranging
Picture 11. The AOA's organic vegetable product Source: Author
41
from the production system to the packaging phase. Based on the interview with the
respondent AN, the agents and the end-consumers of the organic vegetables are aware of the
high-quality standard and the organic farming system used by the AOA. This is in accordance
with the objective of the BSB Foundation and the AOA themselves. The AOA tries to ensure that
the candidate agents, which they will be supplied have understood the AOA’s organic principle
before both parties agree to do the cooperation. AN stated that the use of organic certification
was actually not necessary for the producer because the farm has already established strong
supply chain due to its long-time business cooperation (since 1984). The AOA’s registered agent
system is a way to sell the organic vegetable products through fair trading to the consumers.
During the interview with AOA, it was discovered that the government regulation to attach
organic certification logo (‘Organik Indonesia’) supported the implementation of organic
certification. This logo will provide quality assurance for the consumers. Nonetheless, this logo
can only be obtained if the producer follows the organic certification’s regulation. Furthermore,
the organic certification has obtained increased trust from both registered agents and the end-
consumers in addition to attracting new consumers purchasing the AOA organic vegetables.
FE Chain
The FE’s definition for quality of organic vegetables based on quality attributes
In the FE chain, the high-quality products defined by the sweet taste, good appearance (e.g.
fresh colour, similar form and shape, low rates of holes and damages, low rates of animal
insects, freshness and crisp sounds attributes, and chemical-free residues). Yet, the intensive
organic farming practice is required to produce the high-quality products.
In order to measure the consumer's demand and preference regarding the high-quality of
organic vegetable products, FE conducted active communication and information exchange
with their consumers. Thus, they could receive necessary feedback that could support the
improvement of their products.
Quality Control
Pre-harvesting process
According to the interview with SS (the owner of the FE farm), the integrated production plan
and forecasting system has been implemented in the FE in order to reach the optimal
production of organic vegetables. The FE uses import vegetable seeds in order to produce
organic vegetables with premium qualities.
42
“If we want to have a high quality vegetables with bigger size, we usually need to
buy superior seeds. However, if we only use ordinary seeds but we want to harvest
the vegetables with bigger size, it will be impossible.” (SS, 2017)
SS also added that the important things is to prepare the suitable environment for the seeds to
grow, thrive, and keep healthy. In the Parongpong farm, FE cultivates the vegetables on the
inside and outside the greenhouse. This aims to lower the damages rates and pest attack. During
the harvesting, FE uses manual method to harvest the vegetables. Organic pesticides is given
only if it is necessary and cannot be solved manually. SS stated in the interview that they were
trying to avoid the usage of organic pesticides at all by doing intensive care of the vegetables
and careful planning of the production. FE carries out the sowing, land processing and weeding
every day in the farm. Furthermore, FE performs regular rotation crop system for their
vegetables to prevent pests attack which usually experienced by certain variance of vegetables
that has been planted in the same plot for long period.
Harvesting process
The harvesting process in the FE farm is held from Monday to Sunday. In order to maintain the
product quality, FE harvests the organic vegetables before it grows too big and becomes hard
to cook. The harvesting process is done by manual method to prevent damages. The manual
harvest also helps the producer to measure to readiness of the vegetables to be harvested. This
will reduce the possibility of early harvest.
Post-harvesting process
The organic vegetables that have been harvested in the morning will be sorted and cleaned in
the farm. The remaining vegetables that have been sorted will be used as fertilisers for the next
cultivation. The cleaned vegetables are kept inside the box to protect the vegetables from
contamination, dirt or damages. The boxes are then distributed from the Parongpong farm to
the warehouse in Sukajadi area (Bandung) by motorcycle.
After the organic vegetables arrive in the warehouse, they are cleaned, sorted, weighed and
packaged. SS explained that FE will reject the vegetables that indicates early deterioration,
especially in leafy vegetables. Thus, FE will sort a lot of vegetables during the sorting process
rather than keep it because later they can affect the freshness of the other vegetables. The
rejected leaves from the sorting process will be used for other products, such as salad. However,
before FE used the rejected vegetables for salad, they still need to be sorted to ensure whether
they are fit for consumption. Regarding the grade, FE does not sort the organic vegetables to
43
certain grades (e.g. grade ‘A’ or ‘B’) but puts focus more on the visual and the healthiness of the
vegetables.
“The grade is almost the same. If there is a consumer that asked about the grade,
we will ask them back whether they prefer good visual or the healthiness of the
vegetables.” (SS, 2017)
The sorted organic vegetables are packed into transparent plastic bag with FE label to
distinguish the FE’s products from other producers. In order to keep the freshness of the
vegetables, FE seals the plastic bag and only provide holes at the bottom of the package for the
water. SS argued this is used to prevent for early deterioration due to enzymatic oxidation that
caused by letting the package open. Thus, the vegetables can stay fresh for two to three weeks
inside the refrigerator.
Quality assurance
Instead of using the common organic
certification, SS mentioned that he
followed the IFOAM programs and
regulation on organic farming. Further, he
also became the member of it. Therefore,
he puts the IFOAM logo on his package
instead of the ‘Organik Indonesia’ logo. The
‘Organik Indonesia’ can only be obtained if
the producer follow the organic
certification from the institution in
Indonesia. SS argued that there were
several producers cheating even though
they already received organic certification.
Thus, FE prefer to focus on personal
branding instead of certification. SS also
stated that even though FE does not have
Indonesian organic certification, the
consumers are still willing to purchase the FE’s vegetables. FE will consider to follow the
Indonesian organic certification if the there is a strong reason, such as supplying organic
vegetables to certain company or other countries.
Picture 12. The FE's organic vegetable product Source: Author
44
However, according to the interview with AR from IOA and FM from the PMI, FE also
participated in the PMI. PMI is a PGS that helps the organic producers to apply the organic
farming and get access to the organic certification from the third par ty. Even though FE does
not have the ‘Organik Indonesia’ logo, FE could supply their products to several supermarkets,
restaurant and the individual consumers that trust the quality of FE’s organic vegetables. If FE
follows the organic certification regulation, they might increase the consumer purchase but not
significantly.
KSUGL Chain
The KSUGL and BV farm definition for quality of organic vegetables based on quality
attributes
The KSUGL specified the quality of organic vegetables based on the freshness and minimum
damages. According to the interview with EM from the KSUGL cooperative, the organic
vegetables usually need longer time to rot, which is three to four days longer compared to the
conventional vegetables. It is further indicated by withered leaves for leafy vegetables.
Nevertheless, the BV farm stated that their organic vegetables mostly have crunchier sound and
texture. Moreover, the vegetables have cleaner visual because the farm does not use organic
pesticides to prevent pest attacks. Thus, consumer will not find the remaining pesticides stick
on the vegetables. Additionally, freshness also becomes one of the quality attributes they
defined for their organic vegetables.
Quality control
Pre-harvesting process
KSUGL cooperative receives organic vegetables supply from the Cijulang village farmers.
According to the interview with the MR (Cijulang farmers’ coordinator) and EM (KSUGL staff),
the Cijulang farmers currently starting to implement an integrated production plan and
forecasting system for their organic vegetable farming system. The farmers use local vegetable
seeds that have been cultivated by the farmers. Nonetheless, KSUGL provides farmers with
vegetable seeds that cannot be cultivated by themselves. The Cijulang farmers use ground
water to water the organic vegetables. While, compost is used as the organic fertiliser which
consists of a mixture of goat manure, chicken manure, rice straw and the remnants of
vegetables.
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The organic vegetable farming system of Cijulang
farmers is simpler, but it started to implement the
polyculture system recently. The implementation
of polyculture has not been done entirely by all the
Cijulang farmers. There are several farmers who
are still applying the monoculture system. In the
Cijulang village, tillage usually done at the
beginning of the farming process by giving organic
fertiliser to the soil. The hedgerows and repellent
plants grow around the farm to prevent the pest
distribution which might be from surrounding
farms with conventional farming system. The
Cijulang farmers provide a gap between their
organic farms and the conventional farms. The
purpose is to prevent the chemical contamination
(i.e. fertilizer and pesticides) that could affect the organic vegetables. The organic pesticides is
made from the mixture of water and tobacco leaves. Though, the use of organic pesticides is
minimise by the Cijulang farmers in order to produce higher quality of organic vegetables.
On the other hand, BV implements forecasting system for their organic vegetable crop. The
farm cultivates the local seeds for beans, long beans, carrot and spinach. For export seeds, they
cannot saddled by themselves, thus the farm receive supply from their owner who often travels
to US. The export seeds are mainly used to supply salad vegetable. The BV farm is more
specialised in carrot. This is the reason why DN (KSUGL’s member and distributor) gets supply
from the BV farm. For the organic fertiliser, the farm use mixture of 5 sacks of waste of goat’s
feed, five sacks of goat manure, one sack of the mixture from husk and chicken manure, and
the grass which has been grinded before the fermentation process begin.
The polyculture system in the farm comprises of three different variety of vegetables in one
plot. The seed is mostly spread to the plots instead of planted with certain method.
Nevertheless, certain vegetables are grown in the plastic polybag first before they are moved
to the plot. Furthermore, the pest control is done manually by hand. The BV farm is located at
the foot of the mountain and surrounded by forest. This location provide benefit to the farming
due to low rate of pest attack.
Picture 13. The organic vegetables from MR's farm
Source: Author
46
Harvesting process
The Cijulang farmers harvest the organic vegetables every Monday and Wednesday, then the
vegetables are delivered to the KSUGL. The harvesting process is manually done (i.e. by hand)
in order to prevent the damages which often occur if using the tools. MR also stated that the
manual method is effective to measure the harvest time for the vegetables. If the vegetables
are not ready to be harvested;,the farmers will delay the harvesting process.
The BV farm harvest the organic vegetables manually in the morning before it is distributed to
the consumers. The farm harvest approximately 35 plots of organic vegetables per week.
Post-harvesting process
The Cijulang farmers clean the organic vegetables that have been harvested in the farm. After
the distribution from the Cijulang village to KSUGL, the vegetables are sorted based on its. the
degree of freshness and damages without classify into certain grades, such as grade ‘A’ or grade
‘B’. According to the interview with EM, KSUGL does not do grade for the organic vegetables.
Instead, they mix the quality for grade ‘A’, ‘B’, and ‘C’. Therefore, they could not define it.
“If you see the farm, you could already know the quality for grade A, B and C.
However; we are mixing the grade of vegetable quality here so that we cannot
define it.” (EM, 2017)
KSUGL uses clear plastic bag as the package for the organic vegetables and only add price label
on the package. There is no brand information on the package which could distinguish the
product from conventional vegetables and from the other organic vegetable producer’s
products.
Similar method for sorting the organic vegetables from the KSUGL is also applied in the BV farm.
They only sort the vegetables based on damages and degree of freshness. The BV farm does not
specify the quality of the organic vegetable into grade ‘A’ or ‘B’. The weighing process is done
according the consumers requirements and demand. Thus, there is no certain standard for the
vegetables that should be added in each package. In relation to the packaging for the
vegetables, the farm use paper instead of plastic bag which contains no information about
brand and price. Thus, the visitors in the BV farm need to ask them for the price of the
vegetables. While for the online consumers, they can check the price in the BV farm website.
Quality assurance
47
Since KSUGL does not follow the organic certification regulation, their market is limited to a
certain place (i.e. RPS). Similar to KSUGL, BV also stated that the farm does not have
accreditation from the organic certification body. Thus, the farm only sells the vegetables to the
BV visitor, DN, and online consumers.
4.2.2 Collaboration between Actors
In this section, the collaboration between actors in each organic vegetable supply chain will be
explained. The first part will describe the collaboration between the actors that involved in the AOA’s
supply chain, such as the AOA farm, the registered agents, the supermarket and the end consumers.
The second part of this chapter will focus on collaboration between the FE’s chain actors. The last part
will discuss about the collaboration between actors in KSUGL’s chain. The collaboration between
actors in this study is focused on the communication that has been established among the actors,
including the information exchange. While, for other variable, trust and commitment were also
studied to understand the strength level of organic vegetable actor’s relationship. The comparison of
three supply chain in terms of collaboration between actors can be seen on Table 7.
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Table 7. Current State of the Collaboration between Actors in Organic Vegetables Supply Chains
No Variables AOA Chain FE Chain KSUGL Chain
Cijulang Farmers VB Farm
1. Trust & Commitment
AOA:
Registered agent system
Allow the agents to visit the farm
Not accepting return for unsold vegetables from the consumers
Replacing the vegetables with better quality for the following sales after receiving complaint from the consumer
Open information
Regular information exchange
FE:
Online sales to the end-consumers
Consignment sales for the supermarket
Allow the consumers to visit the farm and the warehouse
Vegetables can be returned
Replacing the vegetables with the better quality after receiving the complaint
Open information
Regular information exchange
Farmers:
Regular visit from the farmers’ coordinator
Starting to implement the harvesting log
Miss-communication and miss-data are still occurred occasionally
Farm:
Direct visit during the collection of organic vegetables
Does not require the log book or farming program
Ask for consumers understanding about organic vegetables quality and quantity
Agents/consumer:
On-time payment
No sudden product changes
Check before accepting the products
Supermarket/Restaurant/consumers:
On-time payment
No sudden product changes
Order for rare vegetables
Rarely return the vegetables
2. Communication
Information exchange
Between AOA and agents/consumer:
Whatsapp mobile application use for regular communication
Direct visit and phone call occur for urgent matters
Regular information exchange about the harvesting vegetables (third times a week)
Information sharing about variety and the quantity of vegetables, quality of products, price and distribution time
Fast response to consumer’s complaint
Information sharing about new variance of vegetables
Between FE and supermarket/restaurant:
Whatsapp mobile application use for regular communication with the consumers
Phone call use only for urgent matters
Direct visit to FE is rarely happen
Information sharing about variety, quantity and quality of the vegetables
Information sharing about price changes and distribution time
Fast response to consumers’ complaint
Fast return for damages product due to short distance between the warehouse and the consumers
Information sharing about new variance of vegetables
Regular visit during the collecting process of the vegetables that holds twice a week
Phone call between the cooperative’s employee and the person-in-charge of the farmers
Organic farming workshops for the farmers
WhatsApp mobile for communication with BV
Direct visit to the cooperative
Between AOA and the farmers (partnership):
Regular visit to farmers’ farm and phone call to report the production plan and harvesting schedule
AOA provides workshops about organic vegetables farming and quality of products for the farmers
Two months intensive control by the AOA before the farmers’ first harvest to ensure the vegetables’ quality
Between FE and the online consumers:
The consumers purchase vegetables through the FE’s website
Phone or text is only used for urgent matters
FE opens organic farming workshop for consumers and public
Communication is mainly done by whatsapp or phone call
Direct visit is rarely. It is usually for important or urgent matters
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AOA Chain
AOA has been adopting the system in which all of products can only be purchased through their
registered agents. People who have interest to sell AOA’s products should register themselves
to the producer. However, AOA has limited number of agent due to their production capacity.
To fulfil the demands from all of their current agents, the producer has decided not to add new
agents even though the waiting list of people is increasing.
The idea of selling the organic vegetables only to the registered agents came from the intention
to apply the fair trading between AOA and their distributor. Their experience in cooperating
with big retailers (i.e. big supermarket CF, HR), has caused high losses for the producer. The
majority of big retailers prefer consignment sales in which the products will be returned to the
producer if it cannot be sold. However, vegetable is the type of perishable products which easily
deteriorate within three days after harvest. By the time the organic vegetables returned to the
producer, the quality was already low it cannot be sold to the consumers anymore. The
producer needs to deliver the organic vegetables based on the quantity that has been agreed
by both of the parties in the partnership contract. Thus, the producer cannot deceive
supermarket by reducing the vegetable quantities. To avoid the consignment sales between the
retailers, AOA established the register agent system. There is only one medium-scale
supermarket that is supplied by the producer. TB supermarket has agreed to do fair-trading
with the producer in which they will not return the products. In order to establish fair trading
for both parties, the supermarket checks the quality of vegetables before sign the accepted bill
from the producer. The bill is usually paid within two weeks after the products arrived.
Communication
According to the interview with AN, there are total 50 agents of the AOA. Out of that number,
approximately 40 agents (i.e. the supermarket, restaurants, catering business and specialised
stores) actively purchase the organic vegetables from the AOA. The communication between
AOA and the agents has been done mainly through the WhatsApp mobile application. All agents
are joined one WhatsApp group. By using that group, AOA inform the variety and the total yield
of organic vegetable crop that will be harvested in the following two days, the quality of
products, the product price, and the distribution time. The agents will place the order through
private message to AOA by mentioning the quantity and variety of product. If the organic
vegetable crop yield is lower than the forecast, AOA will directly inform the agents through the
WhatsApp group. It is also done to inform quality degradation due to bad weather, especially
50
during the rainy season in Indonesia. The agents can understand bad weather negatively affect
the vegetable crop yield. AOA usually inform the agents a day before the distribution time.
Due to that short notice, sometimes the agents find it difficult to inform the situation to their
consumers. After hearing the explanation from the agent, most of the end-consumers finally
understand the circumstances. Based on the interview with the respondents from AOA and the
representative of agents, the communication through telephone or direct meeting were only
applied if there were urgent cases which cannot be discussed via WhatsApp.
Trust and commitment
Trust and commitment from both AOA and the agents are important factors to keep the
relationship strong. To gain trust and commitment from the agents, the AOA sharing all the
information regarding the organic vegetable product to the agents regularly and allow them to
visit the farm. Therefore, the agents could understand the organic vegetable production system
that used by the AOA. By visiting the farm, AOA can also prove the quality of organic vegetables
that they produced. AOA also commits to keep the quality and quantity of vegetables as what
AOA offered to the agents. On the other hand, the agents will gain trust from the producer if
they pay the bills on time and commit with their order. For example, they do not change the
order all of sudden which could cause trouble to the producer. Based on the interview with the
respondent from the AOA and the agents’ representatives, the current information exchange is
effective. The AOA’s quickly response to the questions and complains from the agents to
improve the product quality and service. While, the agents also inform AOA about new variance
of products that can be cultivated by the farm.
New collaboration with rural farmers
To fulfil the high demand from the agents, the AOA start to establish a partnership with seven
small farmers around Bogor region. The farmers get workshop from AOA regarding the organic
vegetable farming system and the quality of products. Additionally, AOA intensively checks the
farmers’ farm for about two months before AOA officially purchase the vegetables from the
farmers. This is done to ensure that the farmers could provide the similar quality of vegetables
as the AOA produced. Moreover, it could avoid the gap which could cause the confusion and
distrust from the agents about the quality of vegetables. The communication between the
farmers and AOA is maintained through a direct visit to the farm and via phone call. The non-
commitment acts could be avoided once the farmers applying the organic vegetables farming
system from the AOA. The system requires the farmers to report their planting plan and
harvesting schedule in which the AOA could detect whether the vegetables that deliver from
51
the farmers are supplied from the farmers’ farm, or it is supplied from the conventional
vegetable farmers.
FE Chain
The actors that are involved in FE chain are supermarkets, restaurants and the end-consumers.
FE prefers to sell their products directly to the end-consumers who order the vegetables
through the FE’s website. For supermarket and restaurants, the order can be done directly to
SS who is the owner of FE. The market segment for FE mainly based in Bandung city and Greater
Jakarta area. For Bandung area, the supply comes from FE farm in Parongpong (Bandung, West
Java). Whilst FE’ partner (i.e. TVMS) supply the demand from Greater Jakarta area from their
farm in Tenjolaya, (Bogor, West Java).
Trust and commitment
FE commitment to their consumers is showed by providing the high-quality vegetables. They
also actively communicate the product quality with the consumers, the supermarket and the
restaurant. For example, FE always inform the consumers if they could not deliver high-quality
of vegetables due to bad weather which negatively affects the crop. Furthermore, FE tries to
inform and give an explanation about the increasing price beforehand to the consumers. Thus,
the consumers could prepare to deal with the price changes. The increasing of price is rarely
happened, except if there are major changes in the production. On the other hand, the
consumers should also inform the producer if there are changes to products their order. As KN
(the head chef of the THF) stated:
“Communications should go well between the supplier and the restaurant. It
includes the price, the quality and some products that ordered by the restaurant.
For example, if there is increasing in products’ price or if the products quality is
lower than it is usually delivered to us, they should inform us about that. Moreover,
also if we have changes in a number of products ordered, we will tell them in
advance.”
The FE transaction system with the supermarkets uses the consignment sales which means
supermarket could return the vegetables if the products were not sold. In FE case, the return
case rarely happened because the vegetables are usually sold within three days since they are
delivered to the supermarkets. So far, FE still feels the benefit of the consignment sales. Thus
they do not change the transaction system with the supermarket (i.e. TBS and SB supermarket).
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Communication
The communication about the vegetable quality, the order, the distribution service with SB
supermarket is done through WhatsApp. The communication by phone call only happens for
urgent matters. During the interview with VR, the communication through Whatsapp or
telephone occurs if there are special orders from the end-consumers (e.g. new variance
products or higher amount of order). For TBS case, SR explained that the communication rarely
happens through WhatsApp or telephone. SR prefers to give the order list of vegetable products
and complain about the product quality via the FE’s employee. The response to the question,
order and complain are quick. Thus, the supermarket is satisfied to trade with the FE. The non-
commitment acts can be avoided due to the effective communication from both of the FE and
the supermarket.
Collaboration Event
Furthermore, at the last SB annual event in 2016, had invited SS and DR (the owner of FE) to be
speakers for the healthy food workshop. The event took place in the SB supermarket building.
The programs included workshop and bazaar about healthy food. FE also actively participated
in the event by opening a bazaar stand to sell their products (e.g. the organic vegetable product,
the micro-vegetables, and the edible flowers).
KSUGL Chain
In KSUGL chain, the actors that involved are: ten small farmers from the Cijulang village that
supply the organic vegetables to the cooperative and an employee of KSUGL who responsible
for the collecting process, sorting, packaging and selling the products. There is an additional
employee to help the sorting and packaging part processes.
Trust and commitment
To maintain the trust and commitment, the regular visit must be carried out. KSUGL mostly
visits the visit to farmers’ land during the vegetable collection. If the quality, the variety, and
the quantity of products that are supplied to the cooperative do not matched with the
harvesting record, the cooperative usually directly asks the farmer and checks the condition of
the farm. Yet, the data record was not effectively implemented. Both the cooperative and MR
said that there were still some miss-communication and wrong-data. For instance, one variety
of vegetables were not written in the log book.
The condition is similar to KSUGL because DN does not the directly visit while collecting the
vegetables from the farmers. On the other hand, DN does not require the farmers to have
53
record book or farming program. DN claims that trust is the essential factor in organic farming.
But DN later stated that he does not strictly ask for certain quality standard or check the farming
program. DN delivers the vegetables directly to the end-consumers. Thus, the end-consumers
can ask or give their complaint about the quality of organic vegetables. DN responds the
complaint or question by explaining the condition of organic vegetables so that the-end
consumers can understand the problem.
Communication
The communication between the cooperative and the farmers are established through the
direct visits and phone call between the cooperative’s employee (i.e. the respondent EM) and
the person-in-charge of the farmers (i.e. the respondent MR). The respondent MR is responsible
to help the cooperative by managing the other farmers during the farming process and
recording the farming data (the planting plan and harvesting plan).
KSUGL also held several organic farming workshops in the past which were attended by the
small farmers. For the invitation to the organic farming workshop from other organisation, the
cooperative usually appoints MR as a representative. It occurs to be an effective information
exchange between the cooperative and the farmers.
DN is a member of KSUGL cooperative and also works as an independent distributor. DN receive
supply from Cijulang farmers for the organic vegetables that will be delivered to the end-
consumers in Bogor city area. According to the interview between DN and the cooperative, a
contract is made to make a clear relationship between both parties. DN borrows several
facilities from the cooperative, thus DN is responsible to pay regular contribution to the
cooperative. The communication between DN and the cooperative staffs is mainly done by
direct visit.
Furthermore, the DN stated that the communication with the farmers in Cijulang has been done
via phone call and direct visit during the collection of vegetables. On the other hand, the
communication between the DN and JI (manager of BV farm) is mostly established via
WhatsApp mobile application. DN has fixed vegetable orders for BV farm. Thus, the
communication between DN and JI is not regular, except the sudden increase in DN’s demand.
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4.2.3 The logistics
In this section, the logistic variable will be determined based on the transportation methods that are used by the organic vegetable supply chain actors. It
also covers the storage methods that are used to maintain the quality of the organic vegetables during the logistic process. The three supply chain channels
will described in this chapter. The logistic comparison of the three different supply chain channels in West Java can be seen in Table 8.
Table 8. The Current State of Logistics in Organic Vegetable Supply Chains
No Variables AOA Chain FE Chain KSUGL Chain
Cijulang Farmers VB farm
1. Transportation
2 big refrigerated trucks
1 middle-size refrigerated truck
1 motorcycle used for distribution at around Bandung City area
Refrigerator truck used for the distribution in Jakarta area (supplies from the TVMS farm)
The cooperative rent a small open truck to collect the vegetables from the Cijulang farmers
The VB farm distribute the vegetables by motorcycle to the cooperative before it is picked up by DN
DN own a small open truck to collect the vegetables from the supplier and to distribute it to the consumers
Cost
Rp 11.000.000 – Rp 12.000.000/month for overall organic vegetables
Delivery cost is include in the vegetables price
NA
Delivery cost to the consumers is include in the vegetables price
The transportation rent cost Rp 1.400.000/month (exclude the fuel)
Transportation cost is include in the vegetables price
The transportation cost for DN is reach approximately Rp 3.270.000/month with Rp 2.500.00 for the truck’s instalment fee
Time allocation for logistics process
08.00-20.00 for harvesting, sorting and packaging process
23.00-01.00 (the following day) for loading process
01.00-11.00 distribution process
11.00 back to the AOA farm
In the noon and the afternoon, the vegetables has been harvested and delivered to the FE warehouse
The sorting and packaging process are done in the warehouse
The morning after, the vegetables start to distribute to the consumers
The farmers harvested the vegetables before the pick-up time
The cooperative waiting at the pick-up point from 08.00-10.00 WIT to collect all the vegetables from the farmers
10.00-15.00 the sorting, weighing and packaging process are hold in the KSUGL cooperative office
08.00-14.00 (the following day), the KSUGL sells the vegetables at the front of RPS building
The vegetables are harvested in the morning before it is pick-up by DN
DN collect all the vegetables from the supplier in the afternoon (at around 16.00 WIT)
The distribution of vegetables to the consumers start on the following day (at around 07.00 in the morning)
2. Storage No cold storage facility is available
The agents mostly own small refrigerator in their store or restaurant
The supermarket keep the vegetables in the refrigerated shelves
FE owned a small refrigerator in their warehouse
The restaurant has a small refrigerator to keep the vegetables fresh
The supermarket only keep the exclusive vegetables in the refrigerated shelves, while other vegetables are displayed in the open shelves
No cold storage facility is available at the farmers’ place, KSUGL office or RP school
The vegetables are keep inside the office with room temperature
No cold storage is available at the VB farm and DN’s place
DN keep the vegetables on the truck (outside DN’s house)
55
AOA Chain
In AOA Chain, the organic vegetables harvested a day before the product delivered to the
agents. The next steps involve cleaning the vegetables from the dirt and the small insects,
sorting and packaging the vegetables into the plastic bag with the AOA logo at the front
package. The vegetables are packed in the boxes based on the agent's order. According to the
interview with AN, AOA does not have a cold storage to store the organic vegetables. Thus, they
try to shorten the time between the harvesting and delivery.
The distribution starts at 01.00 WIT from the AOA office and farm in Cisarua (Bogor). The
distribution route is different each day depending on the agents. Yet, the area is still around the
Greater Jakarta. The truck used for distribution products equipped with refrigerator to prevent
the deterioration during the distribution from the farm to the agents. The distribution starts
early at 01.00 WIT to avoid the traffic congestion and to shorten the distribution time. Thus, the
organic vegetables could arrive on time before the agents open their store or the products are
picked up by the end-consumers. Short the distribution time can maintain the high-quality of
products. The injury on organic vegetables that occur during the distribution process is minor.
The injury usually happens to the products that are placed at the bottom of the pile.
AOA owns two big-sized refrigerated trucks and a middle-size refrigerated truck for the
distribution service. The transportation cost spent by AOA for the distribution service is around
Rp 11.000.000 to Rp 12.000.000 which is apply for the overall AOA’s organic vegetables. The
transportation cost is free for the agents. Thus, the agents do not have to pay extra cost for the
distribution service because the cost already included in the vegetable price.
Figure 8. Timeline of logistics process in AOA Chain
08.00-20.00
Harvesting, sorting and
packaging process
23.00-01.00Loading process
01.00-11.00Distribution
products to the agents and other
consumers around the
Greater Jakarta
11.00
Back to the AOA farm
56
FE Chain
FE use a motorcycle as means the transportation during the distribution process. The harvested
organic vegetables packed in the box and delivered to FE warehouse in Sukajadi, (Bandung city).
In the warehouse, the products from the farm sorted based on the quality and packaged into
250 gr plastic bag with FE label. The organic vegetables delivered to the SB supermarket,
restaurants and the end-consumers location around Bandung by using motorcycle. Major
product injuries are rarely happened due to the short distribution time from the FE house to
the consumers’ place. To illustrate, the distribution process from the FE house to the SB
supermarket takes approximately 15 minutes, while it takes 10 minutes to deliver the organic
vegetables to the THF restaurant. The distribution process starts from approximately 07.00 WIT
due to the demand from the consumers. The SB supermarket opens the store at 08.00 WIT.
Thus the distribution products should have done before its opening hour. It is also applied for
the restaurant, for example, THF which open at 07.00 WIT to serve breakfast to their consumers.
FE usually delivers the product to the restaurant at around 07.00 WIT. The transportation cost
for distribution products is free for consumers because it is included in the price of the organic
vegetables.
To store the remaining vegetables, the FE has a small refrigerator in the FE house. The
vegetables kept in the refrigerator for maximum three days since it harvested. For the SB
supermarket, VR explained that the supermarket does not have specific cold storage for the
vegetables except the open cold storage for display. This is due to the assumption that the
vegetables will be sold in a day. If there are some left-over vegetables that cannot be sold within
one day, the vegetables will be kept in the cold display shelves. For some cases, the organic
vegetables could be put in a big cold storage that use to keep all of the supermarket’s products
but only for one night. The THF restaurant uses the small refrigerator to keep all of the
restaurant’s food. For the FE products, KN said that he does not have to repackage into food
boxes due to FE’s good quality packaging. Thus, the organic vegetables from FE can be directly
put in the refrigerator. The organic vegetables could be finished within one day during the high
season (i.e. weekend time). On the other hand, the maximum time to keep the products is three
days during the weekdays.
57
Figure 9. Timeline of logistics process in FE Chain
KSUGL Chain
The cooperative uses a small open truck to collect
the organic vegetables from the small farmers in
Cijulang Village, Cijeruk (Bogor, West Java). The
collection time for organic vegetables starts from
08.00 WIT in Cijulang Village. The products that
received from the farmers are placed in the wood
basket before delivered to the cooperative office
by car which is approximately 6 km. At first, KSUGL
rented an open truck for the Logistics purposes
before finally bought it as the cooperative facility.
Due to the decreasing of organic vegetable sales,
the cooperative has decided to sell the truck and
rent an open-truck instead. The rental cost of the
truck is Rp 1.400.000/month, which excluding the
fuel. The organic vegetables and fruits from the Cijulang village are delivered to the cooperative
office to be further the cleaned, sorted and packaged process at around 10.00 WIT. The
packaging of the organic vegetables only consits of used plastic food bag without KSUGL label
at the front. EM (responsible for organic vegetable supply chain in KSUGL) said during the
interview that they only attach a small white label for the product price. The packaging process
usually finishes at 15.00 WIT.
noon (± 13.00) and afternoon (± 16.00)
harvest
After the harvesting time (afternoon)
distribute the products to the warehouse for sorting and packaging
process
delivers to the end-
consumers
07.00-08.00 (the following
day)
delivers to the supermarket/
restuarants
Picture 14. The open truck used by the KSUGL to distribute the organic vegetables
Source: Author
58
However, no cold storage solely
dedicated for the organic vegetables.
The products kept in the open basket,
inside the cooperative office. On the
next day, the organic vegetables are
sold in the front of RP School using
similar open-truck in which the
cooperative sells the product with
open table. The selling time ends on
14.00 WIT, and the remaining
products are brought back to the
cooperative office by public
transportation. The common injury during the logistics process usually caused by the friction
between the vegetables and the bottom of the wood basket. Furthermore, there are only two
employees that responsible to do the cleaning, sortation and packaging processes.
Figure 10. Timeline of logistics process in KSUGL Chain
On the other hand, DN (member of KSUGL who also collect the product from the organic
vegetable farmers in Cijulang Village) explained that he owned an open-truck to support the
logistics process. Firstly, he collects the product from the small farmers in Cijulang Village and
picks up the supply from JI that delivered to the KSUGL office. The transportation cost for the
logistics is approximately Rp 3.270.000/month which includes the instalment fee of Rp
2.500.000/month for the truck. The organic vegetables are kept inside the big plastic box during
the transport from the village to DN house in Bogor city (West Java). Collecting is done around
16.00 WIT in the afternoon to shorten the storage period due to lack of cold storage. The organic
08.00
The collecting the organic vegetables from
the farmers
10.00
distribute the product to the KSUGL office for
sorting and packaging process
07.00-07.30
distributes the products to RP school
Picture 15. The sorting and packaging process of organic vegetables in the KSUGL
Source: Author
59
vegetables are placed on the open truck if it is collected a night before being actually delivered
to the consumers.
Afternoon (± 16.00)
The collecting the organic vegetables from the Cijulang farmers and
BV farm
±18.00
Sorting process is done in DN's house
±09.00 (on the next day)
distributes the end-consumers
Figure 11. Timeline of logistics process for DN
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4.3 Current Market Demand
Several attributes have been analysed to identify the current state of market demand for organic
vegetables in Greater Jakarta and Bandung city (Indonesia). There are four types of attribute used in
this study, namely: sensory, health, safety and process. The consumers’ main driving factors for
consuming organic vegetables could be discovered to help produce improving the product quality and
optimising the market. The overview of current quality attributes based on market demand for organic
vegetables is shown in the Table 9.
Table 9. Overview of Attributes in Market Demand
No Attributes Variables Current Demand and Acceptance of
the product
1 Sensory Aroma No aroma
Taste Sweater taste, Less bitter
Appearance Unstandardized size, shape and form with few holes for organic vegetable leaves is acceptable
Sound Crunchier, crisp sound, and freshness
2 Health Nutritious contents No demand due to consumers’ limited knowledge
Chemical content Chemical free content
3 Safety Physical hazards Most of the organic vegetables are free from physical hazards. For particular cases, the caterpillar can be find inside vegetables, such as Chinese cabbage, Caesium or Pak Choi.
Chemical hazards Free from chemical hazards in pesticides and fertilizer.
4 Process Ethical production Free from chemical compound
The environmental-friendly No demand due to consumers’ limited knowledge
Animal welfare No demand due to consumers’ limited knowledge
Sustainability No demand due to consumers’ limited knowledge
4.3.1 Sensory Attributes
The human sensory receptors (i.e. tongue, nose, eyes and ears) are used to observe the sensory
attributes that drive people which finally define the food quality. Five sensory attributes of organic
vegetables that are studied in this research comprise of texture, aroma, taste, appearance and sound.
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The interview results with the respondents from three
different chains revealed some facts. For instances, VR
and SV mentioned that consumers tend to buy the
organic vegetables due their sweeter taste in
comparison with conventional vegetables. While an
interviewed with AN (head of marketing division in
AOA), argued that the taste between organic and
conventional is similar.
However, the appearance of organic vegetables is
varies in terms of size, shape and form. Generally, a few
of small holes are common for organic vegetable
leaves.
The supermarket, specialised store, restaurant and
distributor could understand that condition and agree to
receive the supply from the producers since the holes are
still reasonable. Due to this condition, they usually need to explain to end-consumers who are not
familiar with organic vegetables’ appearance. Yet, it might be difficult to explain the characteristic of
organic vegetables to the new consumers.
The end-consumers who already consume organic vegetables for a long time are already used to this
condition. Most of these end-consumers even believe that the holes on organic vegetable leaves
proofs that the vegetables are indeed organic. The holes on organic vegetable leaves are caused by
the pests (e.g. caterpillar and snail). The pests are restricted to be killed or repelled by using chemical
pesticides. Thus, the holes on organic vegetable leaves can be reduced through proper handling and
planting specific type of plant to repel the pests.
In terms of texture, the respondents generally said that the organic vegetables are crunchier and
crispier compared to the conventional vegetables. Moreover, organic vegetables also tend to have a
higher level of freshness than the conventional ones.
4.3.2 Health Attributes
For this study, the health attributes are defined as the nutritional contents in organic vegetables which
could contribute to improve the people’s health. Mostly, the responds of all the supply chain’s actors,
especially the seller indicated that the main driving factor for consuming organic vegetables is its
chemical-free content. The consumers believe that it could improve their health and body function.
According to the interview, the previous motivation to consume the organic vegetables was to help
Picture 16. The FE's product that was displayed in SB supermarket's shelf
Source: Author
62
consumers recovering from their illness, besides also doing the treatment. Moreover, healthy
consumers stated that after a certain period of consuming organic vegetables, they were more
resistant against diseases compared to when they consume conventional vegetables. The increasing
awareness towards healthy lifestyle drives young people to slowly shift their diet to organic
vegetables. For instance, young married couples start purchasing organic food to feed their children
with organic food due to health reason. Meanwhile, young parents still consume the conventional
vegetables because they have limited budget for the food. They are prioritise organic food for their
children. For some cases, it is shown that an impact of consuming organic vegetables for long-time is
chemical allergy. SV revealed that after 14 years consuming organic vegetables, her body becomes
sensitive to chemical content in vegetables. The allergy is indicated by itching sensation.
During interview, the respondent could not mention the specific nutritional content in the organic
vegetables because they were unable to test the nutrition content of the vegetables. All the producers
are regularly checked their products to ensure the chemical-free content in it through a simple
laboratory test. The chemical test is crucial to provide assurance for their consumers.
4.3.3 Safety Attributes
Consumers might suffer from a health disorder if they consume contaminated food product. Thus,
safety attributes indicates the acceptable hazard level in food. The physical hazards (e.g. mineral,
plant, animal, etc.) are sometimes found in organic vegetables. The respondents (i.e. SS, AN, VR, SV,
HR) explained that their organic vegetables are free from the physical hazard. Nonetheless, in several
cases, caterpillar can be found inside Chinese cabbage, caesium or Pak Choi. As HR stated during the
interview:
“That mostly happens in Chinese cabbage, caesium and Pak Choi. Sometimes there are
also caterpillar eggs inside that three vegetables.” (HR, 2017)
In fact, new consumers are struggling to accept the organic vegetables that contain small insects. This
is due to the perception from long-time consumption of conventional vegetables. These conventional
vegetables are generally free from small insects owing to the use of chemical pesticides. Several loyal
consumers believe the vegetables are organic if they find small insects inside the vegetables (e.g.
Caterpillar) because it indicates that the vegetables are free from chemical pesticides. This case was
supported through the interview with SV.
Chemical hazards define as chemicals content in food that provokes a negative reaction in people
which classified into food intoxicants and food sensitivities (Luning & Marcelis, 2009). The organic
vegetables are free from the chemical hazards due to the zero chemical input that given during the
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farming process (i.e. chemical pesticides and chemical fertiliser). According to the interview with SV
and HR, consumer becomes more sensitive after consuming organic vegetables for a certain period.
In some cases, they could tell the difference between organic and conventional vegetables. This is
because their body rejects the chemical residues in conventional vegetables. The rejection is indicated
by itchy sensation after consuming conventional vegetables. Compared to the physical hazards, the
consumers are more concern about the chemical hazards. Hence, this concern drives consumers to
change their food consumption to organic vegetables.
4.3.4 Process Attributes
The perception of consumer towards production process of organic vegetables is mainly focused on
the idea of chemical free residue content. In general, the end-consumers’ motivation to purchase
organic vegetables is because they are free from chemical pesticides and fertiliser. Yet, ethical
production, environmental-friendly, animal welfare and sustainability aspects are rarely considered.
In fact, the producers which implement those four factors are already applying the organic principle
thoroughly in their farming process.
Developed farms (i.e. AOA and FE) are more open to the consumer's visit. They stated that it is a good
experience for the consumers to gain knowledge and deepen their understanding about organic
vegetable farming. The specialised stores and distributor (i.e. HR, SV and TT), suggest their consumers
to visit the farms in order to check the production process of the organic vegetables and to ask the
producers directly. Consequently, the end-consumers could trust the quality of the organic vegetables
that they are purchased from those stores and distributors. These consumers are willing to pay a
higher price to get a high-quality of organic vegetables. For most of the consumers who understand
the importance and benefits of consuming organic food as well as the long production process behind
it, the high price can be accepted. For consumers who are not familiar with the organic vegetables
argued that the prices is too high. Thus it is difficult to afford organic vegetables for daily consumption.
Overall, the majority of consumers still link the process attributes in organic vegetables to the absence
of the chemical residues. While, the application of organic farming in practice actually include the
ethical production, the environmental-friendly, animal welfare and sustainability factor. This could
indicate that currently consumers have limited knowledge and understanding of organic principles.
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4.4. The Bottlenecks that affects the Successful Connection in Organic
Vegetables Supply Chain
This chapter will describe the bottlenecks that have been found in the three-different organic
vegetable supply chains. In section 4.3.1, the bottlenecks in the quality of products is described. The
following section will cover the bottlenecks in the collaboration between actors (section 4.3.2) and
the logistic (section 4.3.3). However, the comparison of the bottlenecks in the AOA chain, the FE chain
and the KSUGL chain can be seen in the Table 10.
Table 10. The Overview of the Bottlenecks in Organic Vegetable Supply Chains
No Bottleneck AOA Chain FE Chain KSUGL Chain
Cijulang farmers VB farm
1. Quality of products
Bad weather cause to lower quality and lower quantity of the vegetable
Lower altitude
Outdoor farm
Early distribution time
Bad weather cause to lower quantity of the vegetables
Bad weather cause to lower quality and lower quantity of the vegetable
Lower altitude
Outdoor farm
Mixing grades
Limited source and capacity to access the organic certification
Outdoor farm
Mixing grades
No certification
2. Collaboration between actors
The sudden notification from the AOA makes it difficult for the agents to manage their stock
The agent has to convince the end-consumer related to the limited vegetables supply from the AOA
Farm labour’s limited ability and skills to conduct the farming independently according to the integrated production plan
Low interest from youth to works in the organic agriculture farming
Limited supply due to bad weather cause the supermarket and the restaurant to find another producers to supply the products to keep the stocks
Farm labour’s limited ability and skills to conduct the farming independently according to the integrated production plan
Low interest from youth to works in the organic agriculture farming
Limited access to technology in which can help to increase the communication (i.e. Whatsapp)
Limited knowledge and information about organic farming
Low number of employee who works in organic vegetable supply chain
Unequal distribution for knowledge and information sharing
Low interest from youth to works in the organic agriculture farming
3. The logistics The high demand are not equal with the production capacity and the transport facilities
The capacity of the trucks has reached the maximum while the demand is increase
The delivery needs to be more on time
No cold storage facility
NA High transportation cost
The capacity of the truck is not optimally used
No cold storage facility
High transport-ation cost
No cold storage
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4.4.1 Quality of Product
Several bottlenecks affecting the quality of organic vegetable product in the AOA chain, the FE chain
and the KSUGL chain have been found. In the first part of this section, the bottlenecks in the AOA’s
organic vegetable supply chain will be described. It is then followed by the FE chain and the KSUGL
chain.
AOA Chain
In AOA chain, HR and JO stated that the AOA needs to improve the quality of products. During
the bad weather, the quality of organic vegetables from AOA are lower compared to another
brand (i.e. AF). JO stated that the difference in altitude might deteriorate the quality of
products. AF farm is located in Cianjur which has higher altitude compared to the AOA farm.
Furthermore, the organic vegetables that are cultivated outdoor have more severe pest attack
damage during the heavy rainy season. Hence, the AOA’s organic vegetables has lower quality
products during bad weather because the vegetables are cultivated outdoor.
FE Chain
According to the interview with the VR and SR, the quality of the FE’s product was considered
higher than the other producers (e.g. AOA). SS mentioned that the use of both outdoor and
indoor farms give benefit to the quality of organic vegetables during the bad weather (high pest
attacks on the rainy season). However, the quality of the organic vegetables produced by the
AOA is lower than the production during good weather.
Beside the quality of the product, the VR and SR argued that the FE supply for the organic
vegetables is low in terms of quantities. This fact was also supported by the statement from KN.
Even though the limited-supply problem during the bad weather is common, the high demand
of FE’s product shall be carefully solved. The SB supermarket, TB supermarket and THF
restaurant solved this issue by receiving supply from other organic vegetable producers in order
to provide stock for the end-consumers. However, those respondents still wish to have higher
supply even during the bad weather in which FE still find it quite difficult to do because it is
related to nature phenomenon.
KSUGL Chain
According to EM; who is responsible for the organic vegetable supply chain in the KSUGL, the
cooperative does not use the grading system for the organic vegetables. Nevertheless, the
mixed organic vegetables have lower selling price compared to graded organic vegetables. The
highest quality of organic vegetables (indicated by grade ‘A’) has the highest selling price.
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Unfortunately, the cooperative could not segment their market. To illustrate, organic
vegetables grade A could actually be sold to the supermarket, specialised stores or middle to
higher class restaurants. Meanwhile, currently the cooperative only sells their product to the
end-consumers, which mostly are the parents of RPS’s student.
Furthermore, KSUGL does not follow the organic certification due to its limited source and
capacity to access the certification. The high fee organic certification also became one factor
that made the cooperative did not follow the certification process. Intensive monitoring from
the cooperative and the third party to the small farmers who produce the organic vegetables
are required during the certification process. Moreover, it is challenging to urge farmer
performing regular recording for the organic vegetables farming. However, it is found in the
KSUGL. The farm record keeping is important for the certification. Hence, KSUGL has to
encourage farmers by informing the importance of recording farming process for the
cooperative and the farmers.
The bottlenecks found in BV farm are similar to the KSUGL. The use of outdoor farm makes the
vegetables more prone to pest attacks. However, as the BV farm is located in the middle of
forest on the foot of Salak Mount, the threat from pest attack is lower than Cijulang farmers’.
According to the interview, JI stated that the farm does not grade the vegetables. Furthermore,
the BV farm does not have organic certification for the organic vegetables because they found
it too difficult and too complicated.
4.4.2 Collaboration between actors
In the organic vegetable supply chain, the actors who are involved are fewer than the conventional
vegetables. There are still several bottlenecks that affects the success of organic vegetables supply
chain. Hence, the collaboration between actors become necessary to be studied. In this chapter, three
different supply chain will be described.
AOA Chain
Since the AOA chain change the trade system from consignment with the supermarket to the
registered agents, the collaboration between the AOA and the consumers could be improved.
For example, both the AOA and the registered agents agreed to do the transaction after
checking the quality and the quantity of the delivered organic vegetables. Furthermore, the
frequency of communication increases due to the use of WhatsApp mobile application which
enables the actors to share information regarding the organic vegetables. The AOA
representative stated that the current communication allows the registered agents to
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complaint the quality, the quantity, the price or distribution time. At the same time, producer
can quickly response to it. When the AOA changes the market channel by selling the organic
vegetables to their registered agents, the producer could avoid losses that happened with the
consignment sales.
On the other hand, the AOA agents (i.e. JO, HR, and SV) mentioned that they found an issue
difficulties when the producer gave them a sudden notification about the lower quantity and
quality of products due to the bad weather. The producer usually told the agents one day before
the distribution time. Meanwhile, the agents expect higher quantity and quality to fulfil the high
demand from the end-consumers. The sudden notification might affect the sales, most likely
lead to lost sales. Several end-consumers will only purchase organic vegetables from AOA,
rather than buying the products from other supplier because of trust issues. Furthermore, for
the agents who do not have alternative supplier for the organic vegetable products, their sales
might be highly influenced. The majority of agents claimed that they understood the situation
related to sudden notification. However, the agents wished the producer to improve the
system.
Therefore, the agents found the solution by having more than one suppliers for their organic
vegetables. If there were lower quantities of organic vegetable supply from the AOA, the agents
suggested the end-consumers to buy the prodFucts from another supplier. For some cases, the
end-consumer does not want to change the organic vegetables from AOA to another supplier.
This is because the end-consumers already trust and consume the AOA’s organic vegetable for
long-time. Thus, the agents stated that they have to convince them in order to buy the products
from other suppliers. In some cases, it was difficult because several end-consumers tend not to
buy the organic vegetables from the agents if they could not get the AOA product from the AOA.
Eventually, it will have impact on agents’ sales.
DD (head of production division) mentioned during the interview that production labours still
have limited ability and skills to conduct the farming independently (according to AOA’s
integrated plan). Thus, regular monitoring and control from the farm are still needed to be done.
Furthermore, AOA finds it difficult to employ youths because of low interest from youths to
work in the agriculture sector.
FE Chain
FE and AOA similar bottleneck which is related to the effects of bad weather causing lower
production. The sudden notification to the supermarkets and restaurant might disturb the
organic vegetables stock which will be sold to the end-consumers. According to the interview
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with SS, FE strategy to maintain the stable supply of the organic vegetables is by having two
types of farming area (i.e. outdoor farm and indoor farm). In some cases, the productivity of the
organic vegetables during severe weather condition cannot be predicted.
SV stated that the supermarkets tried to prevent the lower supply by increasing the partnership
with other suppliers which is located far from the FE. Supplier diversification helps to provide
stable supply. For example, if FE experiences lack of supply for Kale’s supply. FE will inform SB
supermarket during the harvesting time, then SB supermarket tried to find a solution by asking
the other supplier whether they have the stock for the product.
On the other hand, the THF restaurant has to contact a small farmer in Lembang area to deliver
the organic vegetables to the restaurant if both of the restaurant suppliers could not supply the
product (one of the supplier is the FE).
SS (owner of FE) stated about the difficulties to get youths to works in the organic farming.
Youths are tend to see agriculture as unpromising sector for their career. Furthermore, the farm
labours are still have limited ability and skills to conduct the farming based on the integrated
production plan independently. Thus, SS explained that the production process in FE’s
Parongpong farm is under strict supervision of SS and DR (both are owner of FE).
KSUGL Chain
In the KSUGL chain, the communication were limited compared to other chains. The
communication between the cooperative and the Cijulang farmers were mainly done via phone
call and direct visit by the cooperative. Moreover, the direct visit is regularly held when the
cooperative collecting the organic vegetables from the farmers. However, limited access to the
new mobile technology hampers the communication, specifically the information exchange
between the actors. WhatsApp is a new mobile application which is hardly known by the actors
in the chain.
Yet, the limited knowledge and information about organic vegetables among the cooperative
member were observed during the interview. Due to the limited human resources in the KSUGL,
the member who is in charge for the organic vegetables supply chain should do all the activities
in the chain. The activities ranging from collecting the products, buying, cleaning, sorting,
packaging and selling the organic vegetables to the end-consumers. The cooperative could not
actively observe the farmers’ progress and solve the problems because they give the
responsibilities to certain people (e.g. EM and MR). Thus, there is a knowledge gap about
69
organic vegetables supply chain between the members who actively involved in the sector to
the other members.
On the other side, the knowledge and information related to the organic vegetables farming
mainly known by MR who is often invited to attend the workshop and training for organic
vegetable farming. DN (cooperative’s member) explained that the knowledge and information
that MR shared might not be equally distributed to all the Cijulang farmers. MR said that he
usually checked the others’ farm every once a week and note the harvesting schedule from each
farmer, respectively. This could be the reason for the less-effective communication between
the farmers.
Furthermore, the relocation of KSUGL’s selling location from inside the building of RPS to the
outside lower the sales of organic vegetables. Hence, the cooperative reduce the quantities of
organic vegetables that collected from the Cijulang farmers to lower the costs. The Cijulang
farmers has to find alternative supply chain due to the excess of organic vegetables that cannot
be absorbed by the cooperative. For instance, MR supplies the rest of the organic vegetables
production that cannot be purchase by the cooperative to the landlord of his farm. For other
Cijulang farmers, they supply the organic vegetables to DN.
For BV farm, the limited human source is a challenge that needs to be solved. The BV farm has
one farm coordinator and two farming labours. Half of the farm has not been cultivated due to
limited human resource.
“We hardly find suitable human resources to manage the vegetables production,
even though we are alleviate them by giving the capital.” (JI, 2017)
4.4.3 The Logistics
During the logistics process within three different organic vegetable supply chain in West Java and
Jakarta, several bottlenecks that still need to be solved have been found. The implications of the
bottlenecks in the AOA chain, the FE chain and the KSUGL chain will be explained in detail in this
section.
AOA Chain
According to SR, it would be better if the AOA could deliver the organic vegetables earlier than
current delivery time. The organic vegetables from the AOA arrives in the TB supermarket at
around 08.00 WIT. By distributing the products to the supermarket earlier, SR stated that the
organic vegetables from AOA can be displayed before the peak of grocery time which happens
70
in the morning. Considering that the organic vegetables does have not long shelf life, the
product can be sold within one day. Thus the end-consumers will receives fresh vegetables
every day.
However, the high demand for organic vegetables from the agents are not in line with the
production capacity of the product and also the transportation facilities. During the distribution
process, the capacity of trucks already reach the maximum. Meanwhile, the demand increases
each day and the necessity to delivers the product on time also becomes more urgent.
Nevertheless, due to the increase of traffic congestion, the distribution time becomes longer.
AN stated that the distribution time usually started at 03.00 WIT previously, but since two years
ago, it started earlier at 01.00 WIT to avoid the severe traffic congestion that happened along
the Cisarua road and the Greater Jakarta area. According to SR, even though the distribution
had started at 01.00 WIT, the demand for earlier arrival time for the organic vegetables was still
high. As the high number of agents that need to be supplied were high, the problem for
distribution time has to be solved carefully. The addition of truck for the transportation is
related to the higher expenses as well as the total productivity of the organic vegetables.
Furthermore, AOA do not have cold storage facility to store their organic vegetables products.
This is affects the AOA’s decision to shorten the time between the post-harvesting process and
the distribution process in order to maintain the product quality.
FE Chain
FE use motorcycle as the means of transportation for its logistics. The distribution of product
from the FE house to the other actors (i.e. supermarket, restaurants and the end-consumers)
can then be done in a short time. The motorcycle could reach the location faster than the car
because it can avoid the traffic congestion. Even though the motorcycle has several benefits,
the capacity of the organic vegetables that can be distributed is limited compared to other
transportation, such as truck. However, the distance between the FE farm to FE warehouse and
to FE warehouse to the consumers that located in Bandung city are close. Hence, the motorcycle
can be a suitable transportation for the logistics of organic vegetables.
Different from the refrigerated truck used by the AOA, the motorcycle is not equipped with
refrigerator. Therefore, FE uses box to keep the organic vegetables fresh during the distribution
to the consumers. This practice is found to be quite effective to keep the product quality.
For the distribution of organic vegetables from Tenjolaya farm to TB supermarket, FE uses
refrigerated truck rather than motorcycle due to longer distribution time and distance between
71
the farm and the consumer’s location. Refrigerated truck can distribute higher number of
organic vegetables compared to motorcycle. To conclude, the transportation facilities should
be adjusted to the distance, the distribution time and the number of organic vegetables that
need to be distributed.
KSUGL Chain
In the logistics process of KSUGL chain, several problems have occurred in terms of the
transportation facilities and storage. The decreasing sales of organic vegetables affected the
cooperative’s ability to cover the transportation cost for the distribution of the products. The
high transportation cost has made the cooperative sold their medium-size truck in order to
reduce the maintenance cost.
The location to sell the products moved from the inside of RPS building to the outside of RPS.
The changes in selling location have made significance decreased in the cooperative’s profit
from organic vegetables. The cooperative thus decided to lower the quantities of product that
are sold in the RP School. The current rental cost of the truck is high for the cooperative
considering the capacity of the truck that still can be maximised.
In relation to the cold storage, the time between the harvesting and the selling is quite long
(approximately around 26 hours). This can lead to the high possibility of rapid deterioration.
The limited availability of facilities in the cooperative causes the organic vegetables to be stored
inside the room, instead of in the cold storage or small refrigerator. Therefore, the organic
vegetables can deteriorate faster. This indeed will negatively affect the product quality.
Related to BV farm chain, DN (KSUGL member and distributor) and JI (manager of BV farm)
stated that high transportation cost is one of the biggest bottleneck in logistics. BV farm delivers
the vegetables to the consumers’ location around Bogor city by using motorcycle, while DN
delivers the vegetables by using open truck (without refrigerator). Beside the fuel costs, DN also
pay the instalment fee and service cost for the truck.
Moreover, both BV farm and DN do not have cold storage facility. Even though it is necessary
to have cold storage to keep the high-quality of products, the electricity cost and purchasing of
the refrigerator are higher. BV and DN cannot afford the cold storage. Thus, they try to find an
alternative to keep the quality of products by reducing the time between the harvesting and
the distribution.
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5. DISCUSSION AND LIMITATION
The first section (5.1) in this chapter will discuss the comparison on three different organic vegetable
supply chains that currently available in West Java and Greater Jakarta market channel, current states
of three supply chain factors (i.e. quality of product, collaboration between actors, and the logistics),
and market demand. The key findings that have been explained in Chapter 4 are deliberated with the
conceptual frameworks (Section 5.2). In addition, the limitation of the study is described in the last
part of the chapter.
5.1 Discussion: Comparison on Three Organic Vegetable Supply Chains
The comparison on three different organic vegetable supply chains in West Java and Greater Jakarta
area, includes AOA chain, FE chain and KSUGL chain will be further explained into details. Meanwhile,
the brief comparison of those chains can be seen in Table 11.
Table 11. Comparison on three different organic vegetable supply chains
No Variables AOA Chain FE Chain KSUGL Chain
1. Market Channel More than one market channel
(use of registered agents)
More than one market channel One market channel
2. Current states of
Quality of product Integrated production systems
which requires high-quality
control
Strong supervision from higher
level of management (better
understanding and knowledge
of organic principle, higher
skills in organic farming
practice)
BCI certification
Integrated production systems
which requires high-quality
control
Strong supervision from higher
level of management (better
understanding and knowledge
of organic principle, higher
skills in organic farming
practice)
No third party certification
Member of PMI and IFOAM
Started to implement integrated
systems
Low supervision from higher
level of management
No third party certification
Collaboration
between actors
High trust and commitment
between producer and
consumers (long-time
relationship with registered
agents)
Effective communication (i.e.
Direct visit, phone call,
WhatsApp)
Rapid information exchange
High trust and commitment
between producer and
consumers (long-time
relationship with registered
agents)
Effective communication (i.e.
Direct visit, phone call,
WhatsApp)
Rapid information exchange
Trust and commitment are well
developed
Less intensive communication
(i.e. direct visit and phone call)
Limited information exchange
The logistics Better transport facilities (i.e.
two big refrigerated trucks,
one medium-size refrigerated
truck)
No refrigerator for storage
Transport facilities (i.e.
motorcycle for distribution in
Bandung area, refrigerated
truck for distribution in
Greater Jakarta area)
Refrigerator for storage is
available
One medium-size truck (without
refrigerator)
No refrigerator for storage
3. Market demand Health, safety and process
attributes become the most
contributing factors for market
demand
Health, safety and process
attributes become the most
contributing factors for market
demand
Health, safety and process
attributes become the most
contributing factors for market
demand
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As argued in the literature review, most of the organic food producers use direct marketing channel
to sell their products with premium price and to gain consumer trust (Park & Lohr, 2006; Dimitri &
Greene, 2002). As larger farms were likely to use multiple channels (i.e. AOA and FE), higher risk on
sudden termination of collaboration by the single actor can be reduce (Park & Lohr, 2006; Chang,
2002). As well as the increasing on profit sales and number of consumers (Chang, 2002). AOA sells
organic vegetables to multiple market channels, such as specialised store, supermarket, online
distributor, and restaurant. Meanwhile, FE supplies their products to local supermarket, local
restaurant, and households. Xin-Min (2012) explains that organic vegetable producers that sell their
product through specialised stores have more advantages. AOA established the registered agents
system for their market channel which the majority are specialised store owners. The end-consumers
for this type of chain tend to be more loyal than other chains, which it is highly related to the trust
and commitment in the collaboration between actors.
Smaller-scale of farms are tend to using one channel, especialy during early stages of market channel
development. In KSUGL chain case, they only sell organic vegetables at the RP School. Since the
displacement of their selling location from inside to outside RP School’s building, the profit sales has
been significantly decreased. Those were disadvantages that occurred the dependence on a single
market (Chang, 2002). Moreover, KSUGL also found difficulties to sell their products to other channels
due to its low brand recognition (Lee, Gareffi & Beauvais, 2012).
Moreover, trust and commitment play important roles in the collaboration between actors of organic
vegetable supply chain (Moberg, Cutler, Gorss & Speh, 2002; Peng, G, 2011), especially because of
shorter supply chain and local market focus. As AOA establish a long-time relationship with the
registered agents to obtain a common goal, the communication naturally develops to answer the
market demand. AOA and FE show quick responsiveness to the consumer's complaints by improve
their product quality.
As Kottila and Ronni (2008) argue that collaboration between actors could overcome the lack of
communication and create an innovative thinking which support to tackle the problems in organic
vegetable supply chain. The information exchange is an essential factor in collaboration between
actors (Cooper, Lambert & Pagh, 1997). The rapid information exchange is an effect of the intensive
communication since higher technology is used (i.e. WhatsApp). Meanwhile, KSUGL communicates
with other actors mainly through direct visits and telephone which leads to less intensive
communication, more time consumed, and higher costs. While regarding trust, the relationships
among the farmers, KSUGL and the end-consumers are already well developed.
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For the logistics facilities, this study refers to transportation and storage of organic vegetables supply
chain. AOA has better transport facilities among three chains in which they have two big refrigerated-
trucks and one medium-size refrigerated-truck. Despite the use of motorcycle as the transportation
for FE, the organic vegetables are kept inside the box during the distribution process from the farm to
the markets that are located around Bandung area. The motorcycle is chosen to shorten the
distribution time. Though for Greater Jakarta area, FE uses the refrigerated truck to supply the organic
vegetables from their farm in Tenjolaya, Bogor. KSUGL rents an open medium-sized truck to distribute
the product during the logistics process. Therefore, the quality of products could be maintained better
using the refrigerated truck for longer distribution time. Meanwhile, the motorcycle can be used only
if the location between the farm and consumer is close.
The problem that usually occurred in small scale organic vegetable supply chain is related to lack of
refrigeration and precooling equipment as an effect to minimise the operation cost (Xin-Min, 2012).
Among three producers, the FE is the only producer who owns refrigerator in their warehouse. The
quality of organic vegetables can still be maintained by shortening the time between the harvesting
and selling.
Furthermore, the quality control activities during the whole supply chain process influence the level
of organic vegetable quality which includes control in production properties, production processes
and human processes (Luning & Marcelis, 2009). Among the three chains, AOA and FE have intensive
and integrated production system which requires high-quality control. Both of the chains could
produce grade ‘A’ vegetables. It is supported by the strong supervision from the higher level of
management with better understanding and knowledge of organic principle, and higher skills in
organic farming practice. On the other hand, KSUGL seems lacking in these factors.
Following the quality control, quality assurance becomes the important part that designed to maintain
a consistent standard for product within the production to distribution processes (Luning & Marcelis,
2009; Scott, Vandergest & Young, 2005). AOA is the only chain among the three that own organic
certification from third-party. Meanwhile, FE is one of the producer that preferred not to obtain the
certification which requires difficult process, financial and time cost (Burton, Rigby & Young, 1999;
Strochlic & Sierra, 2007; Sierra et al., 2008). FE argue that they are following the IFOAM regulation
which is the guideline for all the organic certification in Indonesia, even though they do not have the
Indonesia organic certification. KSUGL neither has the organic certification from third-party institution
nor claim as the member of IFOAM. Thus, both FE and KSUGL cannot labelled their product with
‘Organik Indonesia’ logo as they are not certify the product to third-party certification body (David &
Ardiansyah, 2016; Scott, Vandergest & Young, 2005).
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With regards to the market demand, the increase of health awareness has currently been followed by
increasing of organic vegetable demand. The easy access to information becomes one of the drivers
for the people in urban areas (e.g. youths) to engage in organic vegetable consumption. While
previously, old people with high household income have a higher portion of organic vegetable
consumptions. In contrast to the past condition, young people with higher education yet average
household income start purchasing organic vegetables because of their awareness for healthy food
consumption (Probst, Houedjofonon, Ayerakwa, & Haas, 2012). For many cases, young couples
purchases the organic vegetables for their young children to prevent residual chemical contamination
which could cause health problems.
The consumers’ perspective towards the four quality attributes is described in the previous chapter
to get insight into the current market demand. The health, safety and process attributes tend to be
the most contributing factors that drive the consumption of organic vegetables compared to sensory
attributes (Slamet, Nakayusu & Bai, 2017; Guilabert & Wood, 2012; MINTEL, 2003). Chemical-free and
organic production contribute to the increase of people’s health. In some cases, the consumer
becomes more sensitive and grow allergy towards foods that contain chemical residues. The sensory
attributes have more varying results to which some people state that the taste and appearance of the
organic vegetables are not different from the conventional vegetables. While others agree that it is
the significant difference after a certain period of consumption.
To summarise, among three different organic supply chains that are analysed in this study, the AOA
chain has higher contributing factors that help them success in organic vegetable supply chain and
meet the market demand. The FE has higher quality products, yet it has fewer market channel
compared to AOA. Lastly, the KSUGL needs to improve the supply chain factors, which include the
quality of products, collaboration among actors and their logistics, to successfully meet the market
demand.
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5.2 Discussion: reflection on the conceptual framework
The findings in the previous chapter is reflected to the conceptual framework in order to explore the
influence of each factors (i.e. collaboration between actors, the logistics, and quality of product) on
meeting the market demand in West Java and Greater Jakarta. It can be seen in the Figure 12.
Figure 12. Reflection on conceptual framework
The relation of the collaboration between actors to quality of the product
According to the findings in the previous chapter, the AOA farm and the FE farm have more integrated
supply chains compared to the KSUGL cooperative. In the first variable, which is the collaboration
between actors, both trust and commitment factor and communication factor have significant
influence in the improvement of product quality. Both AOA and FE understand the importance of
commitment as it aligns with trust between the farm and the consumers that could improve the
quality of the vegetables and meet the market demand. The farms commit to focus on providing high-
quality vegetables, especially in relation to free chemical compound aspect, freshness and cleanliness.
By ensuring the high quality of the vegetables, consumers trust could be obtained (Moorman, Zaltman
& Deshpande, 1992). Commitment and trust should be applied for both sides. The consumers gain
trust from the farms by being responsible for their order, which means they do not cancel or change
the order in short notice and pay the products on the scheduled time agreed by both sides.
Moreover, the utilization of mobile messenger application to facilitate the communication between
the producer and the consumers cause the increase of information exchange that helps the
improvement in the quality of organic vegetables. The consumers could easily send their complaints
• Transportation • Storage
• Trust & Commitment
• Communication
• Quality Control • Quality
Assurance
Quality of Product
• Sensory attributes
• Health attributes • Safety attributes • Process attributes
Collaboration between Actors
Logistics
Meet the Market Demand
Organic Vegetable Supply Chain
77
or compliments regarding the products, and receive quick response from the producer. Therefore, the
producer will replace the product with a better quality on the following delivery time. The quality
control of the organic vegetables production is improved to ensure that the product’s quality is
acceptable to the consumers. However, the quality of organic vegetables generally declines during
bad weather. Hence, intensive communication is highly important for the producer to share the
information and to gain the consumer’s understanding about current quality of organic vegetables
that could be supplied by the producer. Both producers state that they are open to the consumers
visit to the farm as a means to verify the real condition and situation of the organic vegetables
production process. Thus, both producer and consumers intensive communication could create an
innovative thinking that helps to tacking the current organic vegetable supply chain problems (Kotilla
& Ronni, 2008)
Quality assurance as one of the aspects analysed in this study, in this sense refers to the organic
certification owned by the third party that is recognised by the government. Findings from the
interview show that consumers accept the organic vegetables without organic certification as long as
the quality of the organic vegetables is high. Consumers are still willing to pay a premium price
(Veldstra, Alexander & Marshall, 2014), even though the product is not certified by third-party
certification body. Organic vegetable consumers often visit the farm without prior notification to the
producer as a means to check the production process and the quality of the product for quality
assurance. Producers who supply their product to local market have a more direct communication to
consumers which can be the substitute for certification (Veldstra, Alexander & Marshall, 2014) which
implies the influence of collaboration between actors to product quality. In general, trust,
commitment and communication in the collaboration between actors are important factors that
affect the improvement of organic vegetable products quality, especially due to its relation and
interaction with the consumers as the target market.
The relation of the collaboration between actors to the logistics
Furthermore, the influence of the collaboration between actors’ variable to the logistics is not as
significant as the previous model (i.e. the impact of collaboration between actors to the quality of
product). The producer’s commitment to deliver the organic vegetables on time cannot always be
fulfilled because of the unpredictable situation on the road (e.g. severe traffic congestion). The
producers such as AOA found a solution by starting the delivery time earlier than usual (i.e. they are
currently starting the delivery process from 01.00 WIT while a year ago it was at 03.00 WIT). The
information collected from the interview shows that even though the delivery starts from 01.00 WIT,
a few agents and supermarket still ask the producer to come earlier because the demand from the
end-consumers are high at around 07.00 to 10.00 WIT. While for FE, they prefer to only deliver the
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organic vegetable around Bandung city region, which can be accessed by motorcycle from the
warehouse and takes approximately 15 – 30 minutes. Compared to AOA, the FE market area in
Bandung is smaller. Thus, it is reasonable that FE uses motorcycle to distribute their product while the
AOA needs to use two refrigerated trucks to deliver the organic vegetable to greater Jakarta area (i.e.
Jakarta, Bogor, Depok, Tangerang and Bekasi). FE use the refrigerated truck due to the longer distance
between their Tenjolaya farm in Bogor to the Jakarta area. On the other hand, KSUGL chain with the
Cijulang farmers do not show any demand to have earlier delivery time, which also applies to the other
chain (i.e. KSUGL chain with VB farm). In relation to the storage, the farmer, the cooperative and the
distributor do not have the refrigerator as the facility to keep the quality of the organic vegetables.
The actors decided that the refrigerator is not obligatory at that time due to the limited cost allocated
to the cold storage.
Moreover, the relation between collaboration and storage aspects in logistics is not significant. The
AOA and the KSUGL do not have cold refrigerator for storage, and instead keep the organic vegetables,
that has been packed to plastic bag, within room temperature inside the warehouse. While FE use the
small refrigerator to keep the organic vegetables that have yet to be distributed to the consumers.
There are no requirements from the producer to the specialised store, supermarkets or restaurants
to have refrigerators to keep the quality of the organic vegetables before it is purchased or served to
the end-consumers. However, those actors generally claim that they have refrigerators in their stores.
During the interview, it is found that trust, commitment and communication do not have influence in
storage variable.
The relation of logistics to the quality of the product
As the logistics is assumed to have impact in the quality of product, both transportation and storage
are two key factors that keep the product’s quality high. In terms of transportation, the duration of
distribution and the type of transportation used by the producer during the delivery process
significantly affect the quality of the organic vegetables. Whereas, the usage of refrigerator as the
storage is another factor which needs to be taken into account.
Some producers (e.g. AOA, KSUGL) do not own refrigerators as the cold storage for their organic
vegetable products. Though in general, the specialised stores, restaurants and supermarkets that are
interviewed in this study state that they have at least small refrigerators in their store due to the
necessity to offer fresh vegetables to the end-consumers. It is mentioned in Chapter 4 that the high-
quality of products desired by the end-consumers includes the freshness factor in sensory attributes.
Thus to maintain the freshness of the products, producers need to shorten the duration between
harvesting and distribution processes by having early delivery time.
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On the other hand, the relevance of transportation to the quality assurance is also studied. Veldstra,
Alexander and Marshall (2014) notion that farm location and distance to market are important
influences on organic certification. FE and KSUGL who focused on local market due to its proximity
from farm location are both do not have organic certification. Meanwhile, AOA has organic
certification from third-party because of its large market area (i.e. Greater Jakarta). Therefore, it can
be concluded that short duration of distribution process and the usage of refrigerator are
recommended to manage the high-quality of organic vegetables (occurred from quality control and
quality assurance processes) demanded by the consumers.
The optimisation of the quality of the product and the logistics to meet the market
demand
Based on the conceptual framework, optimization of two variables, namely logistics and quality of
product, is expected to meet the market demand. The quality of product directly interacts with the
sensory, health, safety and process attributes that have been analysed in market demand. To get the
desired result in those four attributes, high-quality control and the use of quality assurance are two
key factors in the production of organic vegetables. AOA and FE have been implementing integrated
organic farming system in their farm’s production. In terms of quality control, both producers explain
that integrated farming plan needs to be made before the farming starts, which is marked by the
seedlings process and the land preparation. According to that plan, the producer will try to manage
the suitable crop protection for every weather condition, which also includes pests and disease
control. In addition, mechanical injuries occurs from the careless harvesting practices and rough field
handling of product can accelerate deterioration and reduce the products’ shelf life (Luning &
Marcelis, 2009). Careful and integrated farming plan is essential in order to produce the organic
vegetables that meets the requirements of four attributes. The free chemical input in the product is
in accordance with the aspects in health, safety and process attributes. While, the sensory attributes
are linked to freshness, taste, colour or cleanliness of the product.
The integrated farming plan allows the producer to be able to calculate the expected yield and
expected variance of vegetables for each plot in the farm. Based on that calculation, the producer
offers organic vegetables that will be harvested within several days to the consumers. In the AOA case,
they open the quota for the consumers’ order two days before the expected date of harvesting
process, and later the data from the order history is used for the next farming plan. FE does not
necessarily apply the quota system to their consumers as what has been done with AOA. Meanwhile,
KSUGL has just started to implement the integrated farming plan to their production in order to fit the
market demand. Therefore, in terms of quality of the product, AOA and FE have better organic
80
vegetables quality compared to KSUGL, making them have a better opportunity to meet the
consumers demand.
The consumers are generally more open to the quality assurance requirement in the organic
vegetables. The information that has been collected during the interviews shows that the quality
assurance is not compulsory as long as the producer is known by the consumers which means the
direct marketing is used in for this case. Direct marketing can gain higher profit and consumer trust
without carry out the certification (Park & Lohr, 2006; Veldstra, Alexander & Marshall, 2014). Thus,
producer’s image is important for the consumers so they could trust the production process (in
relation to health, safety and process attributes) held by the producer. It is also applicable to shorter
supply chain. On the other hand, the longer supply chain usually needs quality assurance due to the
consumer’s unfamiliarity with the product. The certification could give an additional push to food
safety and traceability of the product which is usually required for indirect marketing channel
(Johannsen, Wilhelm & Schone, 2005).
The logistics part is directly related to the sensory attributes. The longer the distribution time, the use
of unrefrigerated truck or open truck could particularly affect the texture, taste, appearance and
sound attributes. The lower quality in regards of sensory attributes could also be affected by the
storage that is used by both the producer and the store. Though, several producers do not have
refrigerator and precooling equipment (Xin-Min, 2012), the use of those equipment are necessary to
store the organic vegetables and maintain the product quality. The use of refrigerator as the cold
storage makes the organic vegetables stay fresh for approximately two to three days longer than the
products not stored in the refrigerator. The higher quality of organic vegetables (e.g. fresher) the more
attractive they are for the consumers.
As the data that has been collected on the field are referred to the conceptual framework, the result
shows a high interaction between ‘the quality of product’ and ‘the collaboration between actors’.
While the collaboration and the logistics aspects do not show a high interaction and influence between
each other. However, the impact of logistics management to the quality of product is high because it
is directly related to the quality control of the organic vegetables. Both logistics and quality of product
are aimed to capture the market demand based on four attributes. It is answered through the high
impact of quality of product to the sensory, health, safety and process attributes, respectively.
5.3 Limitations
Due to the time constraints and scattered location of the respondents, the study could not explore
the whole supply chains within three actors. The supply chains that are analysed in this study are the
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representative of all the chains from each producer. The study also focuses on organic vegetable
producers in West Java as it is one of the highest organic vegetable areas among other regions in
Indonesia. Furthermore, this study offers more general ideas of the current state of the organic supply
chain, rather than an in-depth study for each supply chain factor.
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6. CONCLUSION AND RECOMMENDATION
This chapter is the final chapter of the study. The first section provides the conclusion (section 6.1) of
the study, which contains the answer for each research questions that have been listed in Chapter 1,
Introduction. Furthermore, recommendation for possible improvement and further study related to
organic vegetable supply chain is include in section 6.2.
6.1 Conclusion
In order to answer RQ1, which is about the curent market channel that present in West Java, it is found
that there are three different market channels in the organic vegetables supply chain. First, the organic
vegetable producer (i.e. the AOA) who distribute the product through the registered agent's system
in order to keep the fair trade. This chain proves to be quite effective because most of the registered
agents act as the reseller of the organic vegetables by selling the product in their specialised stores.
The second chain (i.e. the FE) is more focused on selling the product to the supermarkets, restaurants
and online stores via their website. This chain tries to focus on local markets and shorten the distance
between the farm and the markets. The last chain (i.e. KSUGL) has relatively simple market channel.
They collect organic vegetables from village farmers and carry on sorting and packaging processes at
the cooperative office (serves as a warehouse). The cooperative only sell their product to a school in
the Bogor city. Meanwhile, a member of the cooperative who also works as a distributor receives
supply from both village farmers and the BV farm. The organic vegetables are distributed to the end-
consumers which mainly consist of households in the Bogor city.
In the RQ 2, the current state of quality of the product, the collaboration between actors and the
logistics within the organic vegetable supply chain have been found. The comparison among three
supply chains has showed that AOA and the FE has better products quality due to better quality control
system compared to KSUGL. In terms of quality assurance, AOA was the only producer among three
producert that obtained organic certification. In terms of collaboration between actors, both AOA and
FE also show a better communication system in which they has used the recent mobile messaging
technology (e.g. WhatsApp). The communication is more direct between the producer and the
consumers as the the information exchange has been well developed, in which the consumers could
directly file complaints and give recommendations to the producers. The communication between the
KSUGL and other actors is rather limited, which in turn could lead to misunderstanding during the
supply chain processes. For the logistic, two variables have been studied, namely transportation and
storage. AOA has three refrigerated truck in order to meet the demand from all their registered agents
that are located in Greater Jakarta area. In contrast, the FE uses motorcycle as the means of
transportation to distribute around Bandung city and refrigerated truck to distribute to the Greater
83
Jakarta area. On the other hand, the KSUGL rent a open-truck to distribute the organic vegetables
from the farmers to end-consumers in Bogor city. Regarding the storage, both the AOA and the KSUGL
do not have cold storage to keep the organic vegetables during the logisitic process while the FE
owned refrigerated storage that is placed in their warehouse.
Furthermore, RQ 3 aims to understand the current market demand in urban areas based on the quality
attributes of the organic vegetables. The quality attributes are studied in order to give an idea of the
consumer’s perspective toward the organic vegetable product. It shows that higher demand for
organic vegetable products mainly drives from the health, safety and process attributes. While the
sensory attributes are also important, it does not significantly influence the consumers to buy the
products in the first place. The consumers generally refer the organic vegetables to the absence of
chemical use and the improvement of health level.
For RQ 4, several bottlenecks in the quality of the product, the collaboration between actors, and the
logistics have been found in the three organic vegetable supply chains. In terms of quality of product,
all three farms are suffering from lower quality and quantity of organic vegetables during bad weather
(e.g. heavy rainy season) due to the use of outdoor farm. Beside the outdoor farm, the FE also provides
indoor farm for the organic vegetable farming to prevent those bottlenecks. The bottlenecks that are
found in the collaboration between actors include the sudden notification regarding the limited
quantity to supply the organic vegetables to the consumers during the severe weather, and limited
human resources. KSUGL chain has additional bottlenecks, namely limited access to communication
technology (e.g. WhatsApp), limited knowledge and information, and unequal distribution for
knowledge and information sharing among the KSUGL cooperative and the village farmers. Regarding
the bottlenecks in logistics, AOA state they find that problems related to the high demand are not
equal with the production capacity and the transport facilities, and the on-time delivery service to the
consumers, especially supermarkets. While for KSUGL chain, the high transportation cost and the non-
optimal use for truck are their main concerns. Moreover, both the AOA and the KSUGL do not have
storage facility (e.g. refrigerator) to maintain the quality of product during the logistic process.
In relation to the conceptual framework for this study, it is found that the influence of collaboration
between actors has a higher influence to the quality of product compared to the logistics. The
influence of the logistic facilities (i.e. transportation and storage) is high due to the relation with
quality control which is one of the variables in the quality of product. Moreover, the quality of product
and the logistics have higher influence in meeting the market demand in the urban areas based on the
four quality attributes (i.e. sensory, health, safety and process attributes).
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6.2 Recommendation
RQ 5 is included in the recommendation section as it answers the question about the possible
improvements in the quality of product, the collaboration between actors, and the logistics within the
organic vegetable supply chains to meet the market demand. Regarding the current state of organic
vegetables supply chain in Indonesia, the high quality of the product should be prioritised. Thus, it
needs intensive collaboration between actors which requires a higher level of trust, commitment and
effective communication. The logistics works in keeping the quality of the products during the
distribution process. The suitable transportation has to be considered based on the duration of
distribution and the distance between the farm and the market.
More in-depth study can be developed further to analyse each factor that contributes to the organic
vegetable supply chain. As in this study, the organic vegetables supply chain in Indonesia is analysed
only in West Java and Jakarta. Furthermore, the third organic vegetable supply chain can take the
opportunity to learn from developed organic farms (i.e. AOA and FE), to improve the quality of
products, collaboration and logistics factors.
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Appendix.
INTERVIEW GUIDELINES FOR FARMER
Factors Contributing to the Success of Organic Vegetable Supply Chain To Meet Market Demand
(A study case in West Java and Jakarta, Indonesia)
Name of the respondent :
Position :
Name of the organic farm :
Duration :
A. The introduction of the interview of the research background and objective from the
interviewer.
B. List of questions for farmer:
Themes Questions
1. General information 1.1 What is your responsibility in the organic farm? 1.2 When did you implement organic farming for the vegetable product? 1.3 What is your main reason to convert to organic vegetable farming? 1.4 How much the size of the land? 1.5 How much is the turnover every month? 1.6 How much the amount of vegetable has been produced? 1.7 What type of vegetables produced in the farm? 1.8 How many number of employees in the farm? 1.9 Where are your market target region? 1.10 What kind of consumers that purchased your products?
2. The quality of product
2.1 What is your definition of high quality in the organic vegetable product? (regarding texture, aroma, taste, appearance, and sound attributes of the product)
2.2 What are your challenges to provide the quality of product that meet the consumers’ demand?
2.3 How do you measure the quality of product that consumer wanted? 2.4 Quality assurance:
What quality control regulation do you follow?
Do you have an organic product certificate?
What is the name of the institution that releases the certificates?
Do they monitor the quality of organic vegetable products regularly?
Do you think the certificate helps to gain consumers’ trust to purchase the product?
What are the challenges you face during the quality assurance? (regarding the certain regulations that the producers should follows during the production and the supply chain process, e.g. Organic certification or HACCP)
How do you solve quality assurance challenges?
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2.5 Quality control:
How do you control the quality of product during cultivation? (related to the selection of suitable varieties, cultivation practices, and environmental conditions)
How do you control the quality during the harvest process?
How do you decide the harvesting time?
After harvest, how do you deliver product from the farm to the storehouses?
How do you grade the product during the sorting process?
What kind of standards do you use in the grading process?
What is the targeted market for each grade of the product?
How do you manage the knowledge, ability and understanding of the employees in order to ensure the performance of quality control activities? (e.g. provides employee training, regular sharing and evaluation sessions)
3. Collaboration between actors
3.1 How many actors are involved in the organic vegetable supply chain? 3.2 What kind of collaboration that develops between farm and other
actors? (e.g. distributor, supermarket or specialised store, traditional market, the end-consumers)
3.3 How do you maintain the trust and commitment of other actors? 3.4 Have you experienced non-commitment from other actors
(regarding the logistic and quality of product) 3.5 How do you communicate with other actors?
(e.g. face-to-face, telephone, email or video call) 3.6 Is the information exchange in the vegetable supply chain effective? 3.7 If not, what could be improved?
4. Logistic 4.1 How many chains do you have to deliver your product to the market? 4.2 Who is your distributor? 4.3 What transportation do you use to deliver the product to the next
actor? 4.4 What is the major injury of product that often occurred during the
transportation process? 4.5 What are your cost of transportation? 4.6 What time of the day do you usually deliver the product? 4.7 How do you manage the lead time? (e.g. FIFO) 4.8 Do you have a cold storage for the product? 4.9 If not, what kind of storage do you have? 4.10 How do you manage the stock keeping unit? (e.g. MTO, MTS) 4.11 What are the main challenges in transport and storage of your
product?
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INTERVIEW GUIDELINES FOR DISTRIBUTOR/AGENT
Factors Contributing to the Success of Organic Vegetable Supply Chain To Meet Market Demand
(A study case in West Java and Jakarta, Indonesia)
Name of the respondent :
Position :
Name of company :
Duration :
A. The introduction of the interview of the research background and objective from the
interviewer.
B. List of questions:
Themes Questions
1. General information 1.1 What is your responsibility? 1.2 When you become involved in distributing organic vegetables?
2. Logistic 2.1 Where do you deliver the product? 2.2 What transportation do you use to deliver the product from the
farmer to the market? 2.3 What are your cost of transportation? 2.4 What time of the day do you usually deliver the product? 2.5 How long the delivery time from the farmer to the market? 2.6 How do you manage the lead time? (e.g. FIFO) 2.7 Do you have a cold storage for the product? 2.8 If not, what kind of storage do you have? 2.9 How do you manage the stock keeping unit? (e.g. MTO, MTS) 2.10 Do you own a warehouse to gather organic vegetable products
from all the farmers you worked with? 2.11 What are the main challenges in transport and storage of your
product?
3. The quality of product
3.1 What is your definition of high quality in the organic vegetable product? (regarding of texture, aroma, taste, appearance, and sound attributes of the product)
3.2 Have you experience the mechanical injury during the delivery process?
3.3 How do you maintain the quality of the product during the delivery process?
3.4 What are your challenges in meeting the consumers’ demand? 3.5 How do you measure the quality of product that consumers’ wanted
and inform it to the farmers? 3.6 Do you oblige the farmers to have an organic certification or other
quality assurance? 3.7 How do you control the quality of the product during the logistic
process? 3.8 What is the targeted market for each grade of organic vegetable
product?
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3.9 What kind of knowledge and ability that should be present to understand the high quality of the organic vegetable product?
4. Collaboration between actors
4.1 How many actors are worked with you in the organic vegetable supply chain?
4.2 What kind of collaboration that develops between you and other actors? (e.g. farmers, supermarket or specialised store, traditional market, the end-consumers)
4.3 How do you maintain the trust and commitment of other actors? 4.4 Have you experienced non-commitment from other actors?
(regarding the logistic and quality of product) 4.5 How do you communicate with other actors? (e.g. face-to-face,
phone, video call, email, etc) 4.6 Is the information exchange in the vegetable supply chain effective? 4.7 If not, what could be improved? 4.8 What are the main challenges that still needs to be solve?
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INTERVIEW GUIDELINES FOR SUPERMARKET/SPECIALISED STORE
Factors Contributing to the Success of Organic Vegetable Supply Chain To Meet Market Demand
(A study case in West Java and Jakarta, Indonesia)
Name of the respondent : Position :
Name of supermarket/specialised store :
Duration :
A. The introduction of the interview of the research background and objective from the
interviewer.
B. List of questions:
Themes Questions
1. General information 1.1 What is your responsibility in this supermarket/specialised store? 1.2 What is company’s main reason selling the organic vegetable
product in this supermarket? 1.3 Since when you started?
2. The quality of product
2.1 What is your definition of high quality in the organic vegetable product? (regarding texture, aroma, taste, appearance, and sound attributes of the product)
2.2 Do you oblige the farmers to have an organic certification or other quality assurance?
2.3 How do you maintain the quality control of the product when the product being displayed in the supermarket/specialised store?
2.4 How do you measure the quality of product that consumers’ wanted and inform it to the farmer or the distributor?
2.5 What are your challenges in meeting the consumers’ demand? 2.6 Which grade of organic vegetable product that has higher end-
consumers demand? 2.7 How do you manage the knowledge, ability and understanding of the
employees in order to ensure the performance of quality control activities? (e.g. provides employee training, regular sharing and evaluation sessions)
3. Market Demand 3.1 How many organic product have been sold in a month? 3.2 Have the consumers ever return the product due to injured product? 3.3 Do the consumers ever complain about the quality of product? 3.4 What kind of sensory attributes that drives the consumers to buy the
organic vegetable product? (regarding texture, aroma, taste, appearance, and sound attributes of the product)
3.5 What kind of health attributes that could drive the consumers to start purchasing the product?
3.6 Do the consumers always ask the process attributes of the product? (related to ethical production, environment-friendly, animal welfare, free chemical use)
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4. Collaboration between actors
4.1 How many actors are worked with you in the organic vegetable supply chain?
4.2 What kind of collaboration that develop between you and other actors? (e.g. farmers, distributor)
4.3 How do you maintain the trust and commitment of other actors? 4.4 Have you experienced non-commitment from other actors?
(regarding the logistic and quality of product) 4.5 How do you communicate with other actors? (e.g. face-to-face,
phone call, video call, email, etc) 4.6 Is the information exchange in the vegetable supply chain effective? 4.7 If not, what could be improved? 4.8 What is the main challenge that still needs to be solve?
5. Logistic 5.1 How is the logistic flow in your organic vegetable supply chain? 5.2 What is transportation do you use to deliver the product from the
farmer or the distributor to the store? 5.3 What are your cost of transportation? 5.4 What time of the day do you usually receive the product? 5.5 How long the deliver time? 5.6 How do you manage the lead time? (e.g. FIFO) 5.7 Do you have a cold storage for the product? 5.8 If not, what kind of storage do you have? 5.9 How do you manage the stock keeping unit? (e.g. MTO, MTS) 5.10 Do you own a warehouse to gather organic vegetable products
from all the farmers you worked with? 5.11 What are the main challenges in transport and storage of your
product?
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INTERVIEW GUIDELINES FOR RESTAURANT
Factors Contributing to the Success of Organic Vegetable Supply Chain To Meet Market Demand
(A study case in West Java and Jakarta, Indonesia)
Name of the respondent :
Position :
Name of restaurant :
Duration :
A. The introduction of the interview of the research background and objective from the
interviewer.
B. List of questions:
Themes Questions
1. General information 1.1 What is your responsibility? 1.2 What is company’s main reason to purchase organic vegetable
product for their food? 1.3 Since when it is started?
2. The quality of product
2.1 What is your definition of high quality in the organic vegetable product? (regarding texture, aroma, taste, appearance, and sound attributes of the product)
2.2 Do you have any preference about the supplier for specific organic vegetable product?
2.3 Do you oblige the farmers to have an organic certification or other quality assurance?
2.4 How long do you keep the product before you cook it? 2.5 How do you keep the product in the stock? 2.6 What kind of controlling that you use to maintain the quality of the
product? 2.7 How do you manage the human resources to ensure the
performance of quality control activities? 2.8 Do they need to have basic knowledge and understanding about the
quality of the organic vegetable product during the purchasing or the food processing in the kitchen?
3. Market Demand 3.1 How many organic vegetable product the restaurant purchased in a month? (in kg)
3.2 How much do the restaurant have to pay to purchase the product? 3.3 Do the consumers ever ask the process attributes of the product?
(related to ethical production, environment-friendly, animal welfare, free chemical use)
3.4 Do the end-consumer ever ask for the health and safety attributes of the product they consume in the restaurant?
3.5 Does the restaurant offer additional information about the quality attributes of the organic vegetable they use for the foods?
4. Collaboration between actors
4.1 How many suppliers the restaurant have for organic vegetable products?
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4.2 What kind of collaboration that develops between the restaurant and other actors? (e.g. farmers, distributor)
4.3 How do you maintain the trust and commitment of other actors? 4.4 Have you experienced a non-commitment from other actors (e.g.
late delivery products, low-quality products) 4.5 How do you communicate with other actors? (e.g. phone, direct
meeting, email) 4.6 Is the information exchange in the vegetable supply chain effective? 4.7 If not, what could be improved? 4.8 What are the main challenges that still needs to be solve?
5. Logistic 5.1 Where are the supplier for your organic vegetable products mainly based? (i.e. the suppliers’ address in West Java)
5.2 Does the restaurant prepare their transportation to purchase the product from the farmers or the distributor?
5.3 What are your cost of transportation? 5.4 What time of the day do you usually to purchase the product and
deliver it to the restaurant? 5.5 How long is the delivery time? 5.6 Do you have a cold storage for the product? 5.7 If not, what kind of storage do you have? 5.8 What are the main challenges in transport and storage of your
product?
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INTERVIEW GUIDELINES FOR IOA
Factors Contributing to the Success of Organic Vegetable Supply Chain To Meet Market Demand
(A study case in West Java and Jakarta, Indonesia)
Name of the respondent :
Position :
Name of the NGO :
Duration :
A. The introduction of the interview of the research background and objective from the
interviewer.
B. List of questions:
Themes Questions
1. General information 1.1 What is your job? 1.2 Since when did you consume organic vegetable product? 1.3 Do you buy the organic vegetable product regularly? 1.4 Do you allocate your expenditure to buy the organic vegetable
product for daily consumption?
2. Market Demand 2.1 What is your main reason to consume organic vegetable products? 2.2 Do you have any preferences in the quality of organic vegetable
product related to sensory attributes? (i.e. texture, aroma, taste, appearance and sound)
2.3 What do you think about the nutrition contain in the organic vegetable product? Why?
2.4 What do you think about the safety attributes of organic vegetable product?
2.5 Do you think the process attributes in organic vegetable product is important? Why?
2.6 Do you think it is necessary for the farmers to have organic certification or other quality assurance?
2.7 Will you still buy the organic vegetable product without certification? 2.8 How long do you keep the product before you cook it? 2.9 How much money do you spend to buy organic vegetable every
month? 2.10 How many organic vegetable product do you usually purchased in
a month? (in kg)
3. Collaboration between actors
3.1 Where do you usually buy organic vegetable products? 3.2 Do you have a specific store to buy organic vegetable products? 3.3 What factors that drives you to buy the product from that store?
(related to trust and commitment) 3.4 Have you experienced non-commitment with the store? (e.g. low-
quality products) 3.5 Do you collect information about the production process before you
buy the organic vegetable product in the supermarket or traditional market?
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3.6 Does the store offer necessary information about organic vegetable product they sell to the consumers?
3.7 Do you think organic certification is an important factor that drives you to buy organic vegetable products?
3.8 Will you still buy the organic vegetable product without certification? 3.9 Have you ever complaint or give suggestion to the store related to
the quality of product? 3.10 If yes, how do they respond to your complain or suggestion?
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INTERVIEW GUIDELINES FOR IOA
Factors Contributing to the Success of Organic Vegetable Supply Chain To Meet Market Demand
(A study case in West Java and Jakarta, Indonesia)
Name of the respondent :
Institution :
Duration :
A. The introduction of the interview of the research background and objective from the
interviewer.
B. List of questions:
Themes Questions
1. General information 1.1 What is your responsibility? 1.2 What is the organisation’s role in the organic agriculture sector in
Indonesia? 1.3 What is the organisation’ main reason to focus on the organic
agricultural sector in Indonesia? And since when it is started? 1.4 What is your organisation think about the development of the
organic vegetable sector in Indonesia, especially in West Java and Jakarta? (general explanation about the history, farming practices, supply chain & market)
2. Market Demand 2.1 What are current market demand for the organic vegetable product in urban areas? (i.e. sensory, health, safety and process attributes)
2.2 Do you think the organic vegetable product that are available in the market already meet the consumers’ preferences?
2.3 How much the market demand for the organic vegetable product in a month or a year? (the organisation’s data)
2.4 How many farmers that currently available in West Java? 2.5 How many distributors that currently available in West Java and
Jakarta? 2.6 Which physical market in Jakarta that mainly targeted by the
producer and distributor in West Java? 2.7 What are the challenges that still faced by traditional and modern
supply chain to enter the market in Jakarta?
3. The quality of product
3.1 What are the quality of organic vegetable product that currently offer by the farmers? (regarding texture, aroma, taste, appearance, and sound attributes of the product)
3.2 What are the bottlenecks in producing and maintaining the quality of organic vegetable product that still occurred in the supply chain?
3.3 Do you think having organic certification or other quality assurance give more benefit for the organic vegetable supply chain to success in the market?
3.4 What are the challenges for traditional and modern supply chain to maintain their quality of the product? (overview)
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3.5 Which supply chain that is more successful to offer a high quality product for the market?
4. Collaboration between actors
4.1 How many types of organic vegetable supply chain that currently available in West Java and Jakarta?
4.2 What kind of collaboration that develops between the actors in the chain? (e.g. farmers, distributor, supermarket, restaurant/hotel, end consumers)
4.3 Do you actively involved in sharing information related to the organic vegetable supply chain? (e.g. innovation, subsidise for the logistic and production, current market demand, quality standard)
4.4 What is the main challenge that still needs to be solve?
5. Logistic 5.1 What kind transportation facilities that are generally used by the farmers or distributors to deliver their products?
5.2 What kind of storage that generally used by farmers or distributors to keep the product before deliver it to the physical market?
5.3 What are the main challenges in the logistic?
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INTERVIEW GUIDELINES FOR ORGANIC CERTIFICATION INSTITUTION
Factors Contributing to the Success of Organic Vegetable Supply Chain To Meet Market Demand
(A study case in West Java and Jakarta, Indonesia)
Name of the respondent :
Position :
Name of the institution :
Duration :
A. Introduction of the interview of the research background and objective from the
interviewer.
B. List of questions:
Themes Questions
1. General information 1.1 What is your responsibility? 1.2 How many farmers that currently registered for the certification in
West Java? 1.3 What are the regulations that need to follow by the farmers to get
the certification (or to manage their certification)? 1.4 How the institution control the production and the quality of the
product in the organic farm? (i.e. regular inspections) 1.5 What is the standard for organic agricultural practices? (regarding
quality of product) 1.6 How long the certification is applied since the registration?
